Say hello to the ‘Bonk Income Blast ETF’ Every day we stray further from God’s light

Is this dumber than the Pengu ETF? Or the leveraged single-stock Strategy ETF? The possible arrival of a Trumpcoin ETF later this year? It really is in the eyes of the beholder. But we’re getting pretty close to gouging ours out.

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Say hello to the “Bonk Income Blast EFT” …

Every day we stray further from God’s light

Sometimes there’s little Alphaville could write that could possibly improve on the unintentional comedy of a regulatory statement. Today is one of those days. Say hello to the Tuttle Capital Bonk Income Blast ETF.

Principal Investment Strategies 

“The Fund is an actively managed exchange-traded fund (“ETF”) that seeks to provide exposure to Bonk (“Bonk” or the “Reference Asset”) while also generating income through a structured options overlay of Bonk. The Fund, under normal market conditions, will use equity positions, call options, and synthetic positions to gain long exposure to the Reference Asset equal to at least 80% of its net assets (plus the amount of borrowings, if any, for investment purposes), and will implement a systematic put spread strategy to generate income. The Fund seeks to achieve economic exposure approximating 100% of the upside performance (before fees and expenses) of the daily performance of Bonk.

Yes, this is an SEC filing for an ETF that will invest in Bonk, the “social layer and community meme coin of Solana with deep integrations as a utility token across a wide base of application and protocols within the web3 ecosystem”. 

Wait what, there’s more?

“In addition, the Fund may obtain exposure with exchange-traded call options on Bonk, including deep in-the-money call options . . . Finally, the Fund may obtain exposure to Bonk through synthetic long positions constructed using long call and short put options on Bonk with the same strike price and expiration date. To achieve a synthetic long exposure to Bonk, the Fund will buy Bonk call options and, simultaneously, sell Bonk put options to try to replicate the price movements of Bonk. The call options purchased by the Fund and the put options sold by the Fund will generally have one-month to one-year terms and strike prices that are approximately equal to the then-current share price of Bonk at the time the contracts are purchased and sold, respectively. The combination of the long call options and sold put options provides the Fund with investment exposure equal to approximately 100% of Bonk for the duration of the applicable options exposure. By using this Bonk, the Fund may achieve similar investment outcomes with potentially greater capital efficiency. However, synthetic long positions are subject to the risks associated with both call and put options, including the potential for significant losses if the price of Bonk declines.”

Incredibly, this is not actually the first filing for a Bonk ETF. That “honour” belongs to the Rex Shares-Osprey Funds duo, which registered a REX-Osprey Bonk ETF back in January, alongside filings for Solana, Dogecoin and Trumpcoin ETFs. The Tuttle Capital Bonk Income Blast ETF is the same idea, but after a heavy night of huffing glue. It hopes that by buying Bonk calls and simultaneously going short through Bonk put options it will generate the full Bonk “upside” as simply buying Bonk, but “with potentially greater capital efficiency” by generating Bonk-derived income. (Definitely a sentence that would kill a Victorian child.)

“The Fund seeks to generate income for shareholders by employing a put credit spread strategy on Bonk.  Under this strategy, the Fund will sell put options that are near-the-money (i.e., with strike prices close to the current market price of the underlying security) to collect premiums and generate income, while simultaneously purchasing out-of-the-money put options (i.e., with lower strike prices further below the current market price) to hedge against significant downside risk. 

This results in a net credit to the Fund at initiation, with the maximum profit realized if the underlying security’s price remains above the higher strike price at expiration, allowing both options to expire worthless. The Fund’s Adviser will select options based on factors such as implied volatility, time to expiration, and overall market conditions, aiming to balance income generation with risk management, though there is no assurance that the strategy will achieve its objectives or avoid losses. The Fund intends to implement and roll these spreads on a recurring basis. Net premiums received are intended to support the Fund’s income generation objectives.”

Is this dumber than the Pengu ETF? Or the leveraged single-stock Strategy ETF? 

The possible arrival of a Trumpcoin ETF later this year? It really is in the eyes of the beholder. But we’re getting pretty close to gouging ours out.