REX Shares has introduced an innovative ETF that merges exposure to crypto-related equities with a covered call strategy to boost income generation. The REX Crypto Equity Premium Income ETF (CEPI US), now trading on Nasdaq, offers investors a dual advantage: growth potential from leading crypto stocks and steady income via option premiums.
ETF Overview
- Listing: Nasdaq
- Expense Ratio: 0.85%
- Underlying Index: BITA Crypto Assets & Digital Payments Index
- Strategy: Covered calls on crypto-related equities
Investment Strategy
CEPI employs a covered call strategy, selling call options on its portfolio holdings to collect premiums. This approach is designed to:
- Enhance income in volatile markets (e.g., crypto) where option premiums are typically higher.
- Mitigate downside risk during bear or range-bound markets.
However, the strategy may limit upside during strong bull markets if underlying stocks surpass option strike prices.
Index Composition
The BITA Crypto Assets & Digital Payments Index includes 25 US-listed companies across key crypto sectors:
Crypto Asset Leaders (80% weight):
- Blockchain technology
- Crypto asset management & trading
- Crypto banking, payments & services
- Crypto mining
- Digital Payments Leaders (20% weight)
Selection Criteria:
- Top 20 stocks from crypto sub-themes + 5 from digital payments.
- Weighted by 12-month trading volume (individual caps: 5%).
- Quarterly rebalancing.
Performance Considerations
- Pros: High income potential in volatile markets.
- Cons: Upside capped during aggressive rallies.
CEPI in Context
CEPI joins REX Shares’ covered call suite, including:
- FEPI US ($430M AUM | 0.65% fee): Tech-focused.
- AIPI US ($160M AUM | 0.65% fee): AI-themed.
👉 Explore crypto investment strategies
FAQs
Q: How does CEPI generate income?
A: By selling call options on its holdings, collecting premiums regardless of market direction.
Q: What’s the risk of covered calls?
A: Limited upside if underlying stocks surge past option strikes.
Q: How often is the index rebalanced?
A: Quarterly, to reflect market changes.
Key Takeaways
- CEPI combines crypto equity exposure with income generation.
- Ideal for investors seeking yield in volatile markets.
- Not suitable for those betting on unlimited crypto upside.
Greg King, CEO of REX Financial: “Crypto is reshaping finance. CEPI offers a disciplined way to tap into this disruption while earning income.”
### Keywords:
1. Crypto ETF
2. Covered call strategy
3. Income generation
4. BITA Index
5. Volatility
6. Nasdaq
7. REX Shares
8. Option premiums