Calamos Strives To Offer Safer Path To Bitcoin Investment

Representing a fundamental shift in how people store and assess wealth, Bitcoin BTC and the broader cryptocurrency ecosystem has upended the financial paradigm. More than fifteen years ago, when BTC made its public debut, hardly anyone knew anything about decentralized digital assets. Today, cryptos have become a cornerstone of innovation-centric portfolios, with financial services provider Calamos Investments aiming to offer a fresh rethink.

It’s no exaggeration to say that cryptos have reshaped the financial landscape. Last year, data from Bank of America Private Bank revealed that millennial investors aged 21 to 43 who have at least $3 million are taking an unconventional approach to the blockchain. Specifically, the average portfolio exposure to these financial instruments among self-identified conservative investors stands at a lofty 17%.

Such normalization of risk flies in the face of traditional investment wisdom, where conservative exposure typically entails generous portions of stable assets like bonds and blue-chip dividend stocks. Given the anti-establishment nature of crypto investing, the literature of what is considered acceptable risk could fluctuate significantly in the future.

Still, investors who partake in the crypto journey cannot overcome a simple fact: Bitcoin is prone to wild volatility. Current events alone make that clear; recently, the Federal Reserve elected to keep interest rates unchanged, snapping a streak of three consecutive rate cuts that began in September. At the same time, during a press conference, Federal Reserve chair Jerome Powell delivered bullish commentary on cryptos, giving praise for ongoing efforts to provide regulatory clarity for the blockchain ecosystem. With this relatively simple act, Bitcoin — which just a few days prior conspicuously slipped below the six-digit price threshold — screamed higher, reclaiming the $104,000 mark.

That was just one incident. History is replete with examples of flash crashes and secular implosions that have both attracted people to, and repulsed others away from cryptocurrencies. Many are seeking an alternative mechanism to Bitcoin, one that buffs out its rough edges — a solution that Calamos' hopes falls under its purview.

Calamos ETF Products: Striving To Integrate Innovation With Familiarity

Materializing concurrently with soaring interest in Bitcoin and other cryptos is the rise of the exchange-traded fund. Typically providing a basket of securities, ETFs have become attractive to some everyday investors for their simplicity and efficacy. The proof is in the numbers.

According to Statista, the value of assets undergirding global ETFs landed at only $204.3 billion in 2003. Two decades later, this metric skyrocketed to over $11.5 trillion. Today, it's not at all uncommon to see ETFs cover various sectors and even investment strategies. Some funds simply cover one security.

Within this diverse arena stands Bitcoin ETFs — and to expectations, the category has enjoyed a lot of success. During the debut of the first BTC-focused funds, the financial vehicles saw tens of millions of shares (technically "units" of the fund) change hands. The combined trading volumes soared into the billions, demonstrating the popularity of virtual currencies.

However, even on Wall Street proper, critics have noted that the journey within the ETF realm has been as volatile as the crypto market itself. What many investors have sought in response to these wild pricing dynamics is an alternative mechanism to Bitcoin — one that aligns with BTC's growth potential while also providing the mitigatory frameworks common in advanced equity-trading strategies.

That's where Calamos may come in, with a portfolio of innovative products called the Calamos Protected Bitcoin ETF Suite. Earlier, the financial services provider generated waves by offering the Calamos Bitcoin Structured Alt Protection ETF. Listed on the Chicago Board Options Exchange (CBOE), the fund — which features the ticker symbol CBOJ — represents the world's first 100% downside protected Bitcoin ETF.

Thanks to a combination of government-backed bonds and financial derivatives, the actively managed CBOJ fund offers a regulated mechanism to access Bitcoin within a risk-controlled framework. Essentially, the management team overseeing CBOJ does the heavy lifting for investors, allowing them to ride Bitcoin's gains while also potentially receiving the benefits of skilled evasive action during periods of volatility.

Expanding The Suite: CBXJ And CBTJ

Building on the foundation laid by CBOJ, Calamos is now expanding its Protected Bitcoin ETF Suite with two new funds: CBXJ and CBTJ. These ETFs introduce a tiered approach to Bitcoin investing, allowing market participants to choose the level of downside protection that aligns with their risk tolerance and financial objectives.

At their core, CBXJ and CBTJ function similarly to CBOJ, using a structured mix of U.S. Treasuries and options on the CBOE Bitcoin US ETF Index to provide exposure to BTC while mitigating its volatility. However, unlike CBOJ's 100% downside protection, these funds introduce calculated risk in exchange for higher upside potential.

• CBXJ provides 90% downside protection, meaning investors bear a maximum loss of 10% if Bitcoin declines during the one-year outcome period. In return for this slight exposure to risk, CBXJ offers a significantly higher upside cap range of 28% to 31%, compared to CBOJ's 10% to 11.5% cap.
• CBTJ offers 80% downside protection, meaning investors take on a maximum 20% loss but benefit from an even greater upside cap range of 50% to 55%.

All three ETFs will reset annually, with a new upside cap set for each outcome period, allowing investors to reassess their positions based on market conditions.

This tiered structure provides flexibility. CBOJ is best suited for those prioritizing capital preservation, while CBXJ and CBTJ offer options for investors willing to accept some level of risk in exchange for higher returns. Rather than forcing a binary choice between Bitcoin's volatility and complete safety, Calamos' suite allows investors to customize their exposure to the asset's potential without going all in.

Tiered Risk Management

Bitcoin remains one of the most disruptive forces in modern finance, but its volatility continues to be a roadblock for many investors. While traditional Bitcoin ETFs offer direct exposure to the asset, they typically do little to control the wild swings that have defined crypto markets. Calamos' Protected Bitcoin ETF Suite aims to change the equation, offering investors a structured framework that tempers Bitcoin's downside while preserving its upside potential.

With CBOJ, CBXJ and CBTJ, Calamos introduces a tiered approach to risk management, allowing investors to choose the level of protection that fits their strategy. Whether it's full capital preservation with CBOJ, moderate downside risk with CBXJ or higher upside exposure with CBTJ, these ETFs strive to bridge the gap between Bitcoin's potential and the risk controls found in advanced equity strategies.

As Bitcoin adoption continues to accelerate, products like these could play a role in mainstreaming crypto investments. Instead of forcing investors to take an all-or-nothing bet on Bitcoin, Calamos aims to provide a middle ground — an entry point into the digital asset revolution without as much volatility.

Featured photo by Satheesh Sankaran from Pixabay.

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*Cap rates and ranges are shown gross of management fees. Initial cap rates shown are calculated on the business day prior to fund launch.​ 

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Each of CBOJ, CBOA, CBOY and CBOO seeks to provide investment re- sults that, before taking fees and expenses into account, track the positive price return of the CME CF Bitcoin Reference Rate – New York Variant ("BRRNY") ("Spot bitcoin") up to a predetermined upside cap (the "Cap") while seeking to protect against 100% of losses (before fees and expenses) of (i) Spot bitcoin or (ii) one or more of the Underlying ETPs and/or Bitcoin Indexes, in each case, over a period of approximately one (1) year (the "100% Protection 1 Year Outcome Period"). ​ 

Each of CBSJ and CBSY seeks to provide investment results that, before taking fees and expenses into account, track the positive price return of Spot bitcoin up to a Cap while seeking to protect against 100% of Spot bitcoin losses (before fees and expenses) over a period of approximately six months. Each of CBXJ, CBXA, CBXY and CBXO seeks to provide investment results that, before taking fees and expenses into account, track the positive price return of Spot bitcoin up to a Cap while seeking to provide a floor with protection to a maximum loss of 10% of the negative price return of Spot bitcoin (before fees and expenses) over a period of approximately one year (the "90% Protection Outcome Period"). Each of CBTJ, CBTA, CBTY and CBTO seeks to provide investment results that, before taking fees and expenses into account, track the positive price return of Spot bitcoin up to a Cap while seeking to provide a floor with protection to a maximum loss of 20% of the negative price return of Spot bitcoin (before fees and expenses) over a period of approximately one year (the "80% Protection Outcome Period" and collectively with the 100% Protection 1 Year Outcome Period, and 90% Protection Outcome Period, each an "Outcome Period").​ 

The Funds will not invest directly in bitcoin. Instead, the Funds seeks to provide investment results that, before taking fees and expenses into ac- count, track the positive price return of Spot bitcoin by investing in options that reference the price performance of either (i) one or more underlying exchange-traded products ("Underlying ETPs") which, in turn, own bitcoin or (ii) one or more indexes that are designed to track the price of bitcoin ("Bitcoin Index").​ 

A Fund's Target Outcome may not be achieved, and investors may lose some or all of their money. Each Fund is designed to achieve the Target Outcome only if an investor buys on the first day of the Outcome Period and holds the Fund until the end of the Outcome Period. While each Fund seeks to provide a specified percentage of protection against loss- es experienced by the price of Spot bitcoin for shareholders who hold Fund Shares for an entire Outcome Period, there is no guarantee it will successfully do so. If a Fund's NAV has increased significantly, a share- holder that purchases Fund Shares after the first day of an Outcome Period could lose their entire investment. An investment in a Fund is only appropriate for shareholders willing to bear those losses. There is no guarantee the Capital Protection or Floor, as applicable, and Cap will be successful and a shareholder investing at the beginning of an Outcome Period could also lose their entire investment.​ 

An investment in a Fund is subject to risks, and you could lose money on your investment in a Fund. There can be no assurance that a Fund will achieve its investment objective. Your investment in a Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in a Fund can increase during times of significant market volatility. Each Fund also has specific principal risks, which are described below. More detailed information regarding these risks can be found in each Fund's prospectus. 

Digital Assets Risk: The bitcoin network was first launched in 2009 and bitcoins were the first cryptographic digital assets created to gain global adoption and critical mass. Although the bitcoin network is the most established digital asset network, the bitcoin network and other cryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. Moreover, because digital assets, including bitcoin, have been in existence for a short period of time and are continuing to develop, there may be additional risks in the future that are impossible to predict as of the date of this prospectus. Digital assets represent a new and rapidly evolving industry, and the value of the Underlying ETPs' shares depends on the acceptance of bitcoin. The realization of one or more of the following risks could materially adversely affect the value of the Underlying ETPs' shares.​ 

Investing involves risks. Loss of principal is possible. The Funds face numerous market trading risks, including authorized participation concentration risk, underlying ETP risk, cap change risk, capital protection risk or floor risk, as applicable, capped upside risk, cash holdings risk, concentration risk, clearing member default risk, correlation risk, costs of buying and selling fund shares, counterparty risk, derivatives risk, equity securities risk, FLEX options risk, interest rate risk, investment in a subsidiary, investment timing risk, liquidity risk, management risk, market maker risk, market risk, new fund risk, non-diversification risk, options risk, OTC options risk, position limits risk, premium-discount risk, secondary market trading risk, sector risk, tax risk, trading issues risk, U.S. Government security risk, U.S. Treasury risk, and valuation risk. For a detailed list of fund risks see the prospectus.​ 

With respect to each of CBOJ, CBOA, CBOY and CBOO, 100% capital protection is over a one-year period before fees and expenses. With respect to each of each of CBSJ and CBSY, 100% capital protection is over a six month period before fees and expenses. All caps are pre-determined.​ 

Cap Rate – Maximum percentage return an investor can achieve from an investment in the Fund if held over the Outcome Period. Protection Level – Amount of protection the Fund is designed to achieve over the Days Remaining.​ 

Outcome Period – Number of days in the Outcome Period​