Summary CONY is a synthetic covered call ETF focused on generating income by writing calls on Coinbase (COIN), mirroring COIN's volatility and downside. COIN's recent struggles and volatility have led to NAV erosion and reduced distributions for CONY, but long-term growth potential remains if crypto sentiment rebounds. Macro headwinds and crypto market weakness are temporary; COIN is well-positioned for future adoption, making CONY attractive for income seekers once stability returns. CONY remains a viable income-generating ETF, but due to NAV erosion and ongoing risks, it should be a small portfolio allocation until COIN recovers. CONY ( CONY ) is a synthetic covered call ETF that has a primary focus of generating income for investors. It targets Coinbase ( COIN ) as the individual underlying stock it writes covered calls against. Since COIN has been struggling as of late, CONY has also. There has been a lot of volatility for COIN over the last year, which I think has been a reason CONY has been able to offer up some significant distributions. But with the volatility moving to the downside once again, it has provided new challenges for CONY, which has been slowly cutting back on its distributions while at the same time dropping in NAV. As the chart below shows, CONY has been trading largely in line with COIN, with the gap starting to widen in April 2025, as it has with a number of other covered call ETFS. While true, that hasn't stopped the interest in CONY, as it has over $800 million in AUM while trading over 25 million in volume on a daily basis. In this article we'll look at some of the dynamics associated with the ETF, the importance of the underlying, and what I'm looking for to consider taking a position in it once the fear trade eases off. CONY amd COIN chart (Seeking Alpha) The significance of the underlying When considering taking a position in a covered call ETF that has a single underlying stock, it's important to have a good grasp of that stock in the same way you would if you were thinking of taking a position in it. With that in mind, I believe COIN has the strong probability of having a consistent long-term growth trajectory. It is my thought that it has been oversold, as evidenced by the pullback after the solid earnings beat in its last reporting period, where it generated revenue of $1.87 billion, up over 55% year-over-year, beating by $60.37 million. It also had a solid earnings beat, where EPS came in at $1.50 per share, surpassing expectations by $0.40. Since the earnings report the company has been in a freefall, dropping from approximately $343.00 per share on October 31, 2025, to a little over $240.00 per share as I write. CONY has predictably followed suit, continually dropping in share price in conjunction with the price movement of COIN. While this isn't an article on COIN, the point is, when taking a position in a covered call ETF that has one underlying stock, you need to know that stock well. Why this is invaluable is because there are a lot of periods of volatility with covered call ETFS, and if you don't have a solid grasp of the underlying and believe in it, it'll be easy to be chased out of that position potentially resulting in unrealized losses becoming realized losses, while at the same time losing the income stream. It's also important to know the difference between why the share price of the ETF is falling. In other words, is it real NAV erosion or nothing more than the share price dropping in response to the share price of the underlying dropping. For the life of CONY I see it being both, primarily because of the high distribution being paid out. Once the crypto market reverses direction and positive sentiment return, I think CONY will start to trade more sideways or slightly up, with distributions having the support of the strength of the underlying. Macro effects Economic sentiment has been rapidly changing lately, with investors, in many cases, fleeing holdings that are considered risky and either holding that as cash or redeploying capital into less risky assets. Among the general macro elements are interest rates, recession fears, and whether or not the bull market run is over. More specifically, as it relates to CONY, is the dampening sentiment in regard to the overall crypto space, which COIN and CONY are directly associated with. I see this as being a temporary pullback in crypto sentiment, and expect it to reverse course in the not-too-distant future, which will provide support for COIN and CONY. In my view, crypto is still in its early stages of adoption, and COIN is uniquely positioned to take advantage of that over the long haul. For that reason I think, over time, CONY could be a good holding for those seeking income, with the caveat it doesn't appear to have found its bottom yet. More importantly, since it seeks to generate income for investors, I want to see it find its distribution range while maintaining NAV. Conclusion I believe COIN is going to turn around when the fear trade eases, and when it does, CONY should better hold NAV while continuing to pay out a solid distribution. Even so, it seems to me that it's likely it'll have to cut back some on its distribution until that plays out. After all, CONY will perform best in a volatile environment, especially when the price of COIN is climbing. CONY has fallen a lot since its inception, experiencing real NAV erosion during that time. It isn't all NAV erosion, but a lot of it is. Until the fund managers get that under control, it's likely to continue. There are only two things I see that will help with that, which is the return in growth of COIN, which will generate more covered call income, and second, cutting back some on its distribution. Yet, even under that scenario CONY would remain a decent holding for those seeking income, especially in the price range it's trading now. I'm considering taking a position in CONY, but I want to wait to see what happens once COIN rebounds. The major thing to take into consideration with CONY is even with the very real NAV erosion, it continues to do what it was designed to do, which is to provide a good income stream for traders. Even if the distribution declines further, it's still far above the majority of stocks or ETFs that throw off dividends or distributions. At best I would consider CONY to be a very small percentage of an overall portfolio build to generate an income stream for investors; it would be prudent to only have a small weighting with th ETF.
