Summary YETH offers high income via a synthetic covered call strategy on Ether, yielding 74.1%. Distributions are 100% return of capital, making this appropriate for taxable accounts. The ETF carries a high 95bps expense ratio and notable spread risk, making it costly compared to other high-income strategies. YETH may experience capped upside potential as a result of the short call strategy, underperforming the underlying reference ETF during bull runs. Given the high fees, spread risk, and tax implications, I recommend a Hold rating; YETH is best suited for estate planning. The Ether Covered Call Strategy ETF ( YETH ) is an actively managed, exchange-traded fund designed to provide investors with indirect exposure through a synthetic covered call strategy, generating income on the Ether market. YETH has a trailing twelve-month distribution rate of $20.71/share, yielding 74.10%. About Ether Covered Call Strategy ETF YETH was launched by Roundhill Investments on September 4, 2024, on the Cboe BZX exchange. The strategy has a relatively high fee of 95bps, well above the ETF average of 50bps. YETH currently has roughly $104mm in net assets with an average of $4.29mm in share value changing hands on a daily basis, providing adequate liquidity for investors. Despite the strong liquidity, YETH has a relatively high spread risk of 60bps, adding additional expenses to investors actively managing a position. YETH was designed to provide investors with income through a synthetic covered call strategy on Ether. YETH does not directly invest in Ether. At a high level, the strategy provides investors with exposure to the price return of Ether through an actively managed options strategy on ETFs that track the cryptocurrency, buying and selling call and put options contracts to create the appropriate exposure. YETH utilizes both exchange-traded options contracts and FLexible EXchange options [FLEX options] to provide investors with adequate coverage. In order to gain this exposure, the fund will purchase in-the-money call options to provide investors with growth and sell out-of-the-money call options in order to generate income on the premium. The combination of these two investments creates a synthetic covered call strategy. TradingView Because of how the strategy is designed, YETH may underperform during periods of heightened volatility. If the strike price of the short call options is reached, the fund may lose income in order to cover the differential between the price of the option when exercised and the strike price of the option. In general, YETH may outperform the underlying reference ETF, ProShares Ether ETF ( EETH ), during periods of flat or declining price performance. TradingView YETH pays out a robust weekly distribution annualized at $20.71/share, yielding 74.10% on a trailing twelve-month basis. Investors should be aware that the distribution period shifted from monthly to weekly in July 2025. Investors should also note that 100% of the distribution is a return of capital [RoC], making YETH only appropriate for taxable accounts. RoC will lower the investor’s cost basis with each distribution until reaching zero; this will result in a substantial capital gains tax upon selling out of the investment. Because of this feature, YETH may be best appropriate for estate planning as the cost basis resets upon the transfer of assets. Seeking Alpha Seeking Alpha Taking into consideration peer buy-write and covered call strategies, YETH is relatively expensive with a 95bps expense ratio. Though these strategies do not mirror YETH in terms of the investment approach, I believe the comparison can be meaningful given that they are designed to provide investors with a high return of capital. In general, YETH has performed relatively inline with the high-yield cohort. When considering high-income strategies, I believe investors should consider all options, whether it is exposure to cryptocurrency or the broad equity market indices as they share a similar overall objective. Seeking Alpha Risks Related to YETH YETH is a managed investment strategy designed to provide income through a complex derivative strategy, bearing certain risks to the investors. Investors may be exposed to management risk as this is an actively managed fund; management risk transfers the investment skill from the ETF investor to the portfolio management team, making the investor dependent on the expertise of the managers. The strategy may underperform the underlying reference ETF over time, particularly during periods of heightened growth and volatility due to the synthetic covered call strategy. Investing in YETH can bear a substantial tax burden on investors as a result of the source of distributions, resulting in a higher capital gains tax upon selling out of the strategy. In addition to taxes, investors may be exposed to elevated management fees and spread risk when investing and trading YETH, adding certain costs to the overall strategy. Final Thoughts YETH can be utilized for investors seeking high income with indirect exposure to Ether. This strategy may be most suitable for estate planning purposes; those seeking to actively manage exposure to Ether should consider a more direct approach by investing in Ether ETFs. Given the high fees and spread risk, I am recommending YETH with a Hold rating.
