Wave Financial, a digital asset management firm based in Los Angeles, has published a press release, announcing the first ever derivatives-based yield fund. The fund will support the creation of this yield by allowing the sale of Bitcoin call options. It has also been announced that Fidelity Digital Assets will handle Bitcoin custody for the project.
Call options describe contracts between a seller and a buyer, which allows the purchase of an asset at an already agreed price, in a specific time frame.
Called the Wave BTC Income & Digital Fund Ltd., the company hopes that Bitcoin’s heavy rate of volatility will ensure great premiums and also hopes that this will form the source from which monthly dividends will be paid to its investors. Wave Financial expects to be able to pull off an annual yield of at least 18%, which will make it easy to pay its investors a minimum of 1.5% in monthly dividends. The announcement also notes that if the fund generates more, all the additional premiums will be channeled back in and used to acquire more Bitcoins.
According to Wave President Benjamin Tsai:
“For high net worth investors, appetite for innovative yield product with upside potential is strong. This product monetizes higher volatility of BTC to deliver yield, independent of the interest rate environment, while keeping some upside exposure.”
The press release however warns that:
“An investment in Fund/Tokens is suitable only for sophisticated investors who have experience investing in private funds employing the Fund’s strategies, are familiar with investing in and trading Crypto Assets and can afford the loss of their entire investment in Fund/Tokens.”
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