In the rapidly evolving world of digital assets, investors and financial advisors are constantly seeking innovative ways to gain exposure to Bitcoin while managing its inherent volatility. Calamos Investments, a global firm with deep roots in alternative and options-based strategies, has introduced a suite of protected Bitcoin ETFs designed to meet this growing demand. With a legacy dating back to the 1970s—when founder John Calamos pioneered the use of options as a risk management tool—the firm is now applying decades of expertise to the cryptocurrency landscape.
Today, Calamos oversees more than $16 billion in alternative investments, the majority of which are tied to options-driven strategies. Their latest innovation—protected Bitcoin ETFs—represents a strategic bridge between traditional finance and the emerging crypto economy, offering structured exposure with defined risk parameters.
The Rise of Options-Based ETFs
Options-based ETFs have seen a surge in popularity among financial advisors, particularly in uncertain market environments where downside protection is highly valued. Recently, etf.com hosted a webinar exploring the forces behind this trend, featuring Matt Kaufman, Senior Vice President and Head of ETFs at Calamos Investments. He highlighted how investor demand is driving advisor interest:
“We’re seeing nearly 100% of advisors being asked about Bitcoin. I think we’re in the very early innings of providing exposure to Bitcoin in a portfolio.”
This sentiment underscores a pivotal shift—clients want access to digital assets, but not necessarily the full volatility that comes with direct ownership. That’s where structured, options-based solutions come into play.
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Understanding Calamos’ Protected Bitcoin ETFs
For investors hesitant about direct Bitcoin investment due to price swings, Calamos offers a compelling alternative: ETFs that capture Bitcoin’s upside while limiting downside risk. These funds use equity options strategies to create defined outcome profiles over a one-year period. Each fund offers varying levels of protection and return potential, allowing advisors to match client risk tolerance with appropriate solutions.
CBTA: 80% Downside Protection Bitcoin ETF
The Calamos Bitcoin 80 Series Structured Alt Protection ETF – April (CBTA) is designed for moderate-risk investors seeking meaningful upside participation with a cushion against losses.
Key features:
- Tracks Bitcoin’s positive price movements up to a predetermined cap
- Limits losses to 20% over a one-year outcome period (before fees)
- Ideal for investors who want crypto exposure but wish to avoid catastrophic drawdowns
Even if Bitcoin experiences a steep decline—say, 50% or more—the ETF holder’s loss is capped at 20%. This structure provides peace of mind during turbulent markets.
CBXA: 90% Downside Protection Bitcoin ETF
The Calamos Bitcoin 90 Series Structured Alt Protection ETF – April (CBXA) offers stronger downside protection for more risk-averse clients.
Key benefits:
- Participates in Bitcoin gains up to a specified cap
- Protects against 90% of losses if Bitcoin drops between 10% and 100%
- Maximum potential loss limited to 10% over the outcome period (before fees)
This fund suits conservative investors who still want to participate in the long-term growth narrative of Bitcoin without enduring severe short-term volatility.
CBOA: 100% Downside Protection Bitcoin ETF
The Calamos Bitcoin Structured Alt Protection ETF – April (CBOA) takes capital preservation to the next level.
How it works:
- Offers full protection against losses over a one-year period (before fees)
- Delivers returns linked to Bitcoin’s positive performance, up to a predefined cap
- Zero exposure to downside moves, regardless of market collapse severity
This product is ideal for clients who prioritize capital safety but don’t want to miss out entirely on Bitcoin’s potential appreciation.
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How These ETFs Work: The Mechanics Behind the Protection
These protected ETFs utilize a combination of long positions in Bitcoin futures or related instruments and purchased put options or other hedging mechanisms to create their risk-defined profiles. The use of options allows Calamos to engineer specific payoff structures—gaining upside when Bitcoin rises, while sharply limiting losses when it falls.
It's important to note that this protection comes with trade-offs:
- Capped upside: Gains are limited to a predefined ceiling, meaning investors won’t fully benefit from explosive rallies beyond that point.
- Time-bound outcomes: Each series is structured around a one-year outcome period. Returns can vary significantly depending on when an investor enters or exits the fund.
- Fees and expenses: As with any actively managed or structured product, costs may be higher than traditional ETFs and should be factored into decision-making.
Matt Kaufman emphasized that investor behavior varies:
“About half the money comes in on day one, and they hold for the outcome period. Other folks will buy in the middle; they’ll see opportunities for upside capture, and as they’ve captured [gains], they’ll move into some other [series].”
This flexibility allows tactical allocation across different series based on market outlook and client goals.
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Frequently Asked Questions
Q: What does "downside protection" mean in these ETFs?
A: Downside protection limits potential losses over a set period. For example, CBTA caps losses at 20%, CBXA at 10%, and CBOA offers 100% protection against declines—all before fees.
Q: Can I lose money in these protected Bitcoin ETFs?
A: Yes. While losses are capped (e.g., max 20% in CBTA), you can still lose money due to fees, expenses, or if Bitcoin underperforms relative to the cap.
Q: Are these ETFs suitable for long-term holding?
A: These are designed for one-year outcome periods. Holding beyond that may expose investors to unintended risks, as new cycles begin with updated caps and protections.
Q: How do these differ from buying Bitcoin directly?
A: Direct ownership exposes you to unlimited gains and losses. These ETFs trade unlimited upside for defined risk, offering more predictability and reduced emotional stress during downturns.
Q: When is the best time to invest in a series?
A: Ideally at the start of the outcome period. Mid-cycle purchases may result in lower upside potential due to time decay and existing market movement.
Q: Do these ETFs pay dividends?
A: No, these are growth-focused funds without dividend distributions.
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Final Thoughts
Calamos’ protected Bitcoin ETFs represent a thoughtful evolution in how investors can engage with digital assets. By combining decades of options expertise with modern financial engineering, these structured products offer a balanced approach—capturing upside while shielding against severe drawdowns.
For advisors navigating client curiosity about crypto, these funds provide a disciplined, transparent way to participate without abandoning prudent risk management principles. While not suited for those chasing maximum returns at any cost, they fill a critical gap for risk-aware investors stepping into the crypto space.
As the digital asset ecosystem matures, solutions like these may become standard tools in diversified portfolios—bridging innovation with investor protection.