Calamos Investments has unveiled CBOJ, the world's first Bitcoin ETF offering 100% downside protection, set to debut on the CBOE on January 22, 2025. This groundbreaking product combines Treasury securities and options on the CBOE Bitcoin US ETF Index to shield investors from negative Bitcoin returns over 12-month periods while maintaining capped upside potential.
Key Features of CBOJ
- Full Downside Protection: Guarantees zero loss from Bitcoin's negative returns during each 12-month outcome period.
- Capped Upside Potential: Offers exposure to Bitcoin's gains, subject to a predetermined cap rate (to be announced at launch).
- Annual Resets: Renews protection levels and upside caps yearly, adapting to market conditions.
- Active Management: Managed by Co-CIO Eli Pars and the Alternatives Team, with a 0.69% expense ratio.
👉 Discover how CBOJ redefines crypto investment safety
Market Impact and Innovation
CBOJ represents a paradigm shift in crypto investing, addressing the primary concern of institutional and retail investors: volatility. By merging Bitcoin's growth potential with Treasury-backed security, it creates a unique risk-return profile:
| Feature | Benefit |
|---|---|
| 100% Downside Protection | Eliminates Bitcoin's notorious volatility risk |
| Annual Reset Mechanism | Allows continuous adjustments to market dynamics |
| Institutional-Grade Structure | Provides a regulated, transparent vehicle for crypto exposure |
Strategic Advantages
- First-Mover Edge: The only Bitcoin ETF with full capital protection.
- Institutional Appeal: Ideal for pension funds, endowments, and risk-averse investors.
- Cost Efficiency: Competitive 0.69% fee for a structured product.
Potential Limitations:
- Upside capped at undisclosed rate
- Protection valid only if held through entire outcome period
Investment Thesis
CBOJ bridges the gap between traditional finance and crypto markets by:
- Using Treasuries as collateral for stability
- Employing options to capture Bitcoin's upside
- Maintaining liquidity via ETF structure
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FAQ Section
Q: How does the downside protection work?
A: The ETF uses Treasury holdings to offset Bitcoin losses, ensuring no net negative return over each 12-month period.
Q: What determines the upside cap?
A: The cap rate reflects current market conditions and option pricing, announced annually at reset.
Q: Is this suitable for long-term holders?
A: Yes, shares can be held indefinitely with protections renewing yearly.
Q: How does this compare to spot Bitcoin ETFs?
A: Unlike spot ETFs, CBOJ provides built-in risk management while still offering Bitcoin exposure.
Q: What are the tax implications?
A: Structured as an ETF, it offers tax efficiency similar to traditional ETFs (consult a tax advisor).
Industry Perspectives
"CBOJ represents the maturation of crypto investing," says John Koudounis, CEO of Calamos. "We're bringing institutional risk management to digital assets."
The product builds on Calamos' Structured Protection ETF Series, applying proven capital preservation techniques to Bitcoin. Analysts predict this could unlock $50B+ from conservative investors previously wary of crypto volatility.
Performance Expectations
- Base Scenario: 0% to Cap Rate return
- Bear Case: Full capital preservation
- Bull Case: Capped Bitcoin gains
Note: Performance assumes holding through entire outcome period.
Conclusion
CBOJ marks a watershed moment for crypto adoption, offering:
- Unprecedented safety for Bitcoin exposure
- Institutional-grade infrastructure
- Annual flexibility via reset mechanism
As the first protected Bitcoin ETF, it sets a new standard for risk-managed digital asset investing—potentially transforming how both retail and institutional portfolios approach crypto allocations.