NEOS files launch “high income” Ethereum ETFs using indirect ETP exposures to increase risk and produce higher yields. The company creates this opportunity through a system of puts and calls.
ETF analysts theorize that Ethereum’s recent performance encourages this market to specialize. If institutional influx continues at a high rate, companies like NEO can play dangerously large scale on a scale.
The Ethereum ETF market becomes dangerous
Ethereum is doing incredibly well now. Some analysts wonder if Bitcoin itself can be abdicated. Two weeks ago, Ethereum ETF surpassed its BTC-based counterpart, shocking the market as the bullish momentum continued.
Obviously, this high performance has now led to some interesting new product proposals.
Specifically, investment company Neos has submitted to the SEC to create a “high-paying” Ethereum ETF. Essentially, this product differs from other ETH-based ETPs by focusing on the profits of the largest investors.
It does not directly correlate with the token price itself, but instead focuses on investing in spot ETFs.
How does this product work?
After investing in these funds, high-income Ethereum ETF managers generate risky yields by buying and selling puts and call options for these funds.
Neos calls this the “composite covered call strategy.” This could result in higher income juice than direct correlation due to indirect exposure to ETH.
Neos already offers similar high-income ETFs for Bitcoin, but is expanding to a new category. Bloomberg ETF analyst Eric Balknath argued that Ethereum’s recent performance is directly responsible for filing.
If institutional investors continue to give these assets a large influx, there is more wiggle room for more risky plays.
Essentially, Neos’ filing represents the maturation of the entire Ethereum ETF sector. At this time, it is unclear what the SEC will think of the issuer’s proposal. In any case, this increased market confidence seems like an encouraging signal.
The Post Neos file that creates a high-paying Ethereum ETF first appeared in Beincrypto.
