Picking the Right Bitcoin Exchange-Traded Fund
Picking the Right Bitcoin Exchange-Traded Fund
We prefer IBIT over BITO. Here's why.
The two main crypto exchange-traded funds (ETFs) both cover bitcoin.
IBIT, a spot Bitcoin ETF, directly holds bitcoin with a 0.25% expense ratio. It closely tracks the crypto’s price.
BITO, a futures-based bitcoin ETF, has a 0.95% expense ratio that invests in Bitcoin futures contracts instead of bitcoin itself.
We prefer IBIT because the volume is 10 times greater than with BITO. Nearly $2 billion worth of this symbol is trading per day (and we use SPY as a comparison).
BITO is an OK product, but it uses futures and thus has an additional annual drag. The money not invested in futures is then invested in Treasuries.
This "cash-flow" is the reason it includes a dividend. But dividends aren't free money — the product will drop by the size of the dividend.
Unless you have a particular reason for doing so, we prefer the more widely traded IBIT. IBIT holds actual Bitcoin instead of futures, has a much lower expense ratio (0.25% vs. 0.95%) and doesn't have the hidden costs from rolling futures contracts. You get cleaner bitcoin exposure without the complications.
1,750 shares of IBIT = 1 BTC/USD
What is a carry trade in FX?
A carry trade is a strategy using forex pairs where you:
Borrow money in a currency with a low interest rate (short);
Invest it in a currency with a higher interest rate (long).
The goal? Make money from the difference in interest rates between the two currencies. This is called the "carry."
Frank and Paul explain the trade more here:
We include some calculations here showing how much this daily carry amounts to per $10,000 traded.
So what's the catch?
Carry is only one part of the trade. The currency’s price movement matters, too. These aren’t “set-it-and-forget-it” positions because they need active management — just like any other trade would. A gain from carry can be wiped out by a loss in the underlying currency move. The currency’s price movement also matters. But a carry does provide for an important strategic aspect of trading currencies.
Open an account without new forex platform in tastytrade:
Crypto Ranges
tastytrade makes 20 tokens available to trade on the platform:
tastycrypto has a newsletter as well:
Two Trade Ideas
SPY ($600.56) Call Broken Wing Butterfly (JUL) $0.08 Credit
They say "never short a dull market.” The S&P 500 has been grinding higher on low volume going into the summer. If you think it might continue but want to avoid the potential headline noise, a call broken wing butterfly is an interesting setup here. Playing for just under or at new highs in the next 38 days, with no risk to the downside, being long the 600 call, short 2x the 610 calls, and long 1x the 630 calls is a risk one to make one wide broken wing butterfly.
Palantir Technologies (PLTR) ($133.08) Short Call Spread (JUL) $2.85 Credit
One of the cogs in the "bro basket" is it’s one of the higher volatility underlyings on the board. If you’re looking for short delta at highs, with a relatively high volatility, the 140/150 short call spread trades at around 1/3 the width of the strikes with a roughly 67% probability of profit.
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Michael Rechenthin, Ph.D., (aka “Dr. Data”), managing director of research and development, has 25 years of trading and markets experience. He’s known best for his weekly Cherry Picks newsletter. On Thursdays, he appears on Trades from the Research Team LIVE.
Nick Battista, tastylive director of market intelligence, has a decade of trading experience. He appears Monday-Friday on Options Trading Concepts Live. On Wednesdays, he co-hosts Johnny Trades. @tradernickybat
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