Cryptocurrency Information Bureau News: GameStop Covered Call ETF is born! Bitcoin strategy too. Keep an eye on this new financial innovation! #Bitwise #GameStop #CoveredCall
Video explanation
New investment in GameStop stock? What is a "Covered Call ETF"? An explanation for beginners!
Hello, I'm John, your blockchain guide!
Recently, there was some interesting news in the world of investing. A new type of financial product has been released that uses shares from GameStop, a famous American video game store. It's called Bitwise GME Option Income Strategy ETF (IGME). It sounds a bit complicated, right? But don't worry! Today, I'll explain this news in an easy-to-understand way, even for those of you who are not yet familiar with investing or blockchain.
This new financial product was launched by Bitwise Asset Management, a company that specializes in investments.
What kind of company is GameStop?
"GameStop (ticker symbol: GME)" is a large American video game retail chain. In Japan, it is like a large game store. Recently, GameStop announced a strategy to hold part of the company's money in Bitcoin (a type of digital money used on the Internet!), which has just become a hot topic.
What is an "ETF"? It's often used as an introduction to investing, but...
Now, the term "ETF" that you may have seen in the news is an abbreviation for "Exchange Traded Fund," which is called "exchange-traded fund" in Japanese.
That was a bit of a difficult phrase, but to put it simply,An "assorted pack" of stocks and assets from various companiesAnd these packs themselves can be easily bought and sold on the stock exchange (where stocks are bought and sold) just like individual company shares.
- You can invest in a little bit of everything, so it's easy to spread out your risk (if one thing doesn't work out, you can make up for it with something else).
- Easier to get started than choosing individual stocks
It has these features. That's why it's popular with beginner investors.
Main topic! New ETF "IGME" using GameStop stocks
Bitwise has just announced the Bitwise GME Option Income Strategy ETF (ticker symbol: IGME), a type of ETF that focuses specifically on GameStop Corp. shares (GME). This ETF aims to make a profit using a "covered call strategy" using GameStop Corp. shares.
The strategy is being led by Jeff Park, head of Alpha Strategy at Bitwise.
"Covered call strategy"...that's another difficult term! But this is the core of this ETF. Next, let's break this strategy down in more detail.
The most interesting question: How does the "Covered Call Strategy" work?
The "covered call strategy" is a way to earn additional income from your stock holdings. It sounds like magic, but there is a mechanism behind it.
Let's think about it with an analogy!
Let's say you have a very popular limited edition toy (imagine this as GameStop stock).
- Step 1: Sell the rights
You have the right to say to someone, "I promise to sell you this toy for 1 yen next month."Call OptionsBy selling this right, you will receive a commission (PremiumFor example, you would receive 500 yen. - Step 2: Keep the stock (toy)
The important thing is that you have the toy (GameStop stock) in your possession at this time.Covered(This means that there is proper collateral.) This is called a call strategy.
So, what will happen next month?
- Pattern A: The prices of toys have gone up a lot!
Let's say the market price of the toy becomes 1 yen. The person who bought the rights will of course buy the toy from you for 2000 yen. You will then sell the toy for 1 yen, but you will have received a commission of 1 yen at the beginning. If you hadn't sold the rights, you might have been able to sell it for 500 yen, but the commission will definitely be income. - Pattern B: The price of toys has remained the same or has gone down!
Let's say the market price of the toy becomes 9000 yen. The person who bought the rights can buy it on the market for 9000 yen, but they are not going to bother to buy it from you for 1 yen. So the rights are not used. You keep the toy, and the 500 yen commission you received at the beginning becomes your income.
This ETF, IGME, aims to steadily build up income by repeatedly trading GameStop shares in this way, selling rights and earning fees. Rather than simply hoping for a big rise in stock prices, it aims to make profits by using these options transactions (buying and selling the rights to future transactions).
What's interesting about this news?
John finds this news interesting for a couple of reasons.
- Combining well-known companies with new financial technologies: It's interesting that shares in a company that many people know, like GameStop, are being used in this new type of ETF.
- Diversifying investment strategies: This shows that there is a way to make a profit using a mechanism called options, rather than simply waiting for stock prices to rise.
- Related to Bitcoin (albeit indirectly): The timing of the emergence of a new financial product related to such a company may also be a point of interest, as it comes after GameStop itself announced its investment in Bitcoin.
Of course, there are risks in any investment. This ETF may also result in losses if the GameStop stock price falls significantly. Just because it's a new system doesn't mean you'll necessarily make a profit, so you need to be careful.
John's comment
Wow, there are so many different products coming out in the world of investment! I thought it was an interesting attempt to combine a popular stock like GameStop with a somewhat specialized system like options trading. Blockchain technology is also evolving every day, and the world of finance is also changing rapidly with new ideas. I'm looking forward to seeing what new things will appear next!
This article is based on the following original articles and is summarized from the author's perspective:
Bitwise Debuts First Ever GameStop Covered Call ETF