- ETCO writes call options on Ethereum-linked ETPs to generate income for investors.
- The fund offers biweekly payouts with a 0.66% annual expense ratio on the NYSE Arca.
- Grayscale expands its income fund lineup with ETCO alongside BTCC and BPI products.
Grayscale has announced the launch of the Grayscale Ethereum Covered Call ETF (Ticker: ETCO). The fund debuted on NYSE Arca on September 3, 2025, with assets under management of $1.4 million and an initial net asset value of $35.01. Designed as an income-first product, ETCO targets investors seeking both exposure to Ethereum’s volatility and structured income opportunities, positioning itself as a regulated alternative in the growing crypto ETF space.
Structure and Strategy of ETCO
The fund adopts a covered call writing strategy. Rather than holding Ether directly, ETCO systematically sells call options on Ethereum-linked exchange-traded products such as the Grayscale Ethereum Trust and the Ethereum Mini Trust.
This is because the fund will gain premiums associated with Ether volatility by writing options close to current spot prices. This insurance income supplements conventional returns and provides investors with the opportunity of a stable cash flow. According to Grayscale, ETCO seeks to generate current income as its primary objective, while its secondary goal is to capture returns linked to Ether’s price performance.
The fund charges the investors an expense ratio of 0.66% per annum to cater to the costs related to the active derivatives management. ETCO pays incomes twice a month, aiming to distribute them on the 15th and 30th of each month. At launch, Grayscale confirmed that nearly 40,000 shares were outstanding with no premium or discount to NAV.
Grayscale’s Broader Income-Focused Lineup
ETCO joins Grayscale’s growing list of income-generating products alongside the Grayscale Bitcoin Covered Call ETF and the Grayscale Premium Income ETF. This development marks another step in Grayscale’s strategy to meet investor demand for outcome-driven solutions in digital assets. Krista Lynch, Senior Vice President of ETF Capital Markets at Grayscale, explained,
We know that investors are all unique with different needs and investment goals, and we’re excited to introduce this new ETF as part of our commitment to providing innovative, outcome-oriented solutions that meet them where they are.
The product reflects Grayscale’s commitment to offering regulated, accessible vehicles for investors who seek more than simple price appreciation.
Related: Grayscale Files Spot AVAX ETF With SEC for Nasdaq Listing
Balancing Opportunity and Risk
Potential benefits of ETCO to income-seeking investors do exist, but trade-offs are also present. The premiums of the options offer steady income and help to mitigate downside risk in unstable markets. However, this strategy limits the ability to gain significantly when the price of Ethereum increases well beyond the option strike prices.
Being non-diversified and literally derivative-heavy, there are exposures to risks such as constraints on liquidity, margin requirements, and the accuracy with which portfolio managers forecast. Grayscale admits that there is no guarantee of the fund ever meeting its stated objectives.
ETCO appears during a wave of heightened institutional interest in Ethereum. Its structure caters to the more general market demand for government-regulated, yield-based crypto products. By offering a new approach, ETCO stands right in the middle of this expanding investor base interested in crypto strategies beyond plain-vanilla spot exposure.
As Ethereum further establishes itself as the second-largest digital asset, would income-structured products like ETCO offer first opportunities for mainstream investors to seek growth and yield?
