BlackRock filed with the SEC on October 19 for the iShares Bitcoin Managed Protection ETF (PBIT), a fund designed to provide Bitcoin exposure through options and fixed-income securities rather than direct Bitcoin holdings or spot Bitcoin exchange-traded products.
The preliminary prospectus for PBIT excludes direct Bitcoin and spot Bitcoin exchange-traded product holdings. The fund would instead use long call-spread strategies with staggered monthly tranches to gain Bitcoin exposure through derivatives.
How the Fund Would Work
Each tranche would buy call options with strike prices near 90% of Bitcoin's reference value, providing roughly 10% initial downside protection before fees, while selling higher-strike calls that cap potential gains. Fixed-income holdings would supply additional income and loss mitigation within the fund.
The prospectus describes how money entering PBIT could reach Bitcoin indirectly. Dealers selling the fund's options could hedge by trading shares of BlackRock's existing iShares Bitcoin Trust (IBIT) or Bitcoin futures, or they could offset risk against positions they already hold.
Potential Bitcoin Demand
The path to Bitcoin purchases remains indirect. A hypothetical $1 billion PBIT fund with option notional equal to its assets and a net delta of 0.40 would create $400 million of hedge-equivalent exposure for dealers. If half were hedged through IBIT and a quarter of that demand resulted in new IBIT share creations, the result would be approximately $50 million in spot Bitcoin purchases, or about 610 BTC at $82,000.
However, new Bitcoin purchases would only occur when authorized participants create new IBIT shares. If dealers hedged by buying existing IBIT shares from other investors, the total Bitcoin held by spot funds would remain unchanged.
Fund Structure and Risk
Protection levels are set individually for each monthly tranche, with different strikes and start dates. BlackRock warns that a tranche's distance to its strike can widen once Bitcoin appreciates significantly, and that investors could lose some or all of their investment.
The fund's actual returns would depend on option premiums, caps, fixed-income performance, fees, and the interaction of multiple tranches, making shareholder experience dependent on entry point and timing.
Market Context
Calamos launched protected Bitcoin funds in 2025, with CBOJ holding $15.9 million and CBXJ holding $16.4 million as of October 19. PBIT would need approximately 61 times CBXJ's current assets to reach $1 billion.
BlackRock reported nearly $15.5 trillion in assets under management at the end of the third quarter. Wealth managers could use PBIT as a new allocation for investors who find unprotected Bitcoin difficult to fit into risk-budgeted portfolios.
