Calamos Investments has announced the launch of the world's first Bitcoin ETF designed to offer 100% protection against downside risk. The new fund, named the Calamos Bitcoin Structured Alt Protection ETF (ticker: CBOJ), is scheduled to begin trading on the CBOE on January 22, 2025.
This innovative product aims to provide investors with exposure to Bitcoin's potential growth while using a structured options strategy to guard against losses. It represents a significant development for investors who are interested in digital assets but concerned about their notorious volatility.
How the CBOJ Bitcoin ETF Works
The Calamos Bitcoin Structured Alt Protection ETF (CBOJ) is not a direct Bitcoin investment vehicle. Instead, it utilizes a combination of U.S. Treasury securities and options contracts linked to the CBOE Bitcoin US ETF Index.
This structure is engineered to achieve two primary goals:
- Track the positive price return of Bitcoin, up to a predetermined maximum cap.
- Provide 100% protection against negative returns from the reference index if shares are held for the entire outcome period.
The fund is actively managed and will reset its strategy annually. This means that each year, a new upside cap rate will be set, and the downside protection will be refreshed for the next 12-month outcome period.
Key Fund Details for the January 2025 Outcome Period
| Detail | Specification |
|---|---|
| Ticker Symbol | CBOJ |
| Listing Date | January 22, 2025 |
| Exchange | CBOE |
| Reference Asset | CBOE Bitcoin US ETF Index |
| Outcome Period | January 22, 2025 - January 31, 2026 |
| Downside Protection | 100% (if held through the entire outcome period) |
| Upside Cap Rate | To be determined and announced after market close on January 22, 2025 |
| Annual Expense Ratio | 0.69% |
| Portfolio Management | Co-CIO Eli Pars and the Calamos Alternatives Team |
Addressing Investor Concerns About Bitcoin Volatility
Bitcoin is known for its significant price swings, which have historically deterred many conservative investors and institutional portfolios. The CBOJ ETF is specifically designed to address this concern.
Matt Kaufman, Head of ETFs at Calamos, stated, "Calamos seeks to meet advisor, institutional and investor demands for solutions that capture bitcoin's growth potential while mitigating the historically high volatility and drawdowns of this fast-growing and high performing asset."
This fund allows investors to participate in the digital asset space within a familiar, regulated ETF wrapper that prioritizes risk management. It builds upon the firm's existing suite of Structured Protection ETFs, which offer similar downside protection strategies on traditional indices like the S&P 500® and Nasdaq-100®. For those looking to diversify into crypto without the typical associated risk, this structure offers a compelling alternative. 👉 Explore more risk-controlled investment strategies
Important Risks and Considerations for Investors
While the 100% downside protection is a key selling point, it is crucial for investors to understand the specific conditions and risks involved.
The protection is not guaranteed. The fund's prospectus clearly states, "The Target Outcome may not be achieved, and investors may lose some or all of their money." The protection is designed to work only under specific conditions.
The outcome is period-dependent. The capital protection is designed for investors who buy shares on the first day of the Outcome Period and hold them until the very end. Investors who buy or sell shares at any other time may not receive the full benefit of the protection and could experience losses.
The upside is capped. In exchange for the downside protection, the fund's potential gains are limited to a predetermined cap rate. If Bitcoin's price surges far beyond this cap during the outcome period, investors in CBOJ will not participate in those gains beyond the cap.
Other inherent risks. The fund is subject to numerous other market risks, including derivatives risk, counterparty risk, liquidity risk, and the specific risks associated with the digital asset market, which is still new and rapidly evolving.
Potential investors are strongly urged to read the fund's full prospectus to understand all associated fees, risks, and mechanics before investing.
Frequently Asked Questions (FAQ)
What is a downside protected Bitcoin ETF?
A downside protected Bitcoin ETF is an exchange-traded fund that aims to provide investors with exposure to Bitcoin's price performance while using financial instruments like options to limit potential losses. The Calamos CBOJ ETF seeks to protect 100% of an investor's principal from losses in the reference index if held for a full one-year period.
How does the Calamos CBOJ ETF achieve 100% protection?
The fund employs a structured options strategy on the CBOE Bitcoin US ETF Index alongside holdings in U.S. Treasuries. The options are configured to provide a payoff that offsets losses in the index, effectively creating a floor for potential losses while capping the maximum potential gain.
Is the 100% downside protection guaranteed?
No, the protection is not a guarantee. The fund's objective is to provide this outcome, but it is not assured. Various factors, including extreme market conditions, counterparty risk, or the fund's expenses, could prevent it from achieving its target outcome, potentially resulting in investor losses.
Can I trade this ETF like a normal stock, and will I still be protected?
Yes, you can buy and sell shares of CBOJ on the exchange throughout the trading day like any other ETF. However, the 100% downside protection is specifically designed for investors who hold their shares for the entire approximately one-year Outcome Period. Buying or selling mid-period will likely result in a different outcome, and you could lose money.
What is the trade-off for having downside protection?
The primary trade-off is a capped upside. The fund will set a maximum percentage return (the cap) that investors can achieve during each Outcome Period. If Bitcoin's value increases significantly beyond this cap, investors in CBOJ will not benefit from those excess gains.
Who is this Bitcoin ETF best suited for?
This ETF is ideally suited for cautious investors who want exposure to the potential growth of Bitcoin but are unwilling to accept the full volatility and risk of direct ownership. It is designed for those with a one-year investment horizon who can commit to holding for the entire Outcome Period to seek the intended risk/return profile.