The first options-based income ETF tied to GameStop Corp. (GME) launched today, expanding the rapidly growing category of single-stock covered call funds.
The Bitwise GME Option Income Strategy ETF (IGME) aims to generate high yields by writing covered calls on shares of GameStop, giving up some upside in exchange for option premium income. The fund, which charges an expense ratio of 0.98%, fell 2.1% in afternoon trading.
IGME is just the second ETF tied to the meme stock, following the T-REX 2x Long GME Daily Target ETF (GMEU), a leveraged product that launched in April and has quickly grown to $17 million in assets under management.
While most single-stock ETFs have focused on leveraged and inverse strategies, covered call funds have also gained significant traction, especially on volatile names with cult-like retail followings.
The YieldMax suite has been particularly successful. The YieldMax TSLA Option Income Strategy ETF (TSLY) has amassed $1.2 billion in assets, while the YieldMax MSTR Option Income Strategy ETF (MSTY) now commands a massive $4.8 billion, despite launching just over a year ago.
These funds sell call options to generate yield, offering investors eye-popping monthly income streams. But the strategy comes with a trade-off: capped upside and continued exposure to downside risk.
If the stock surges, covered call ETFs miss out on most of the gains. If it drops, they still feel the pain, just slightly cushioned by the income.
That trade-off hasn’t worked out well lately. MSTY is up 109% over the past year, trailing Strategy Inc.’s (MSTR) 149% gain. TSLY has climbed only 39%, while Tesla Inc. (TSLA) jumped 94% over the same period.
Still, investors continue to pile in, lured by the big yields and the simplicity of the strategy. Issuers, in turn, are capitalizing on the demand. Like IGME, the YieldMax funds charge hefty fees of around 1%.
The GameStop ETF is a curious move for Bitwise, a firm best known for its crypto-focused lineup. On the surface, a fund tied to a video-game-retailer-turned-meme-stock doesn’t quite fit. But there is a crypto connection.
Like MicroStrategy before it—once a software firm, now essentially a Bitcoin holding company—GameStop appears to be following a similar playbook. The company recently disclosed it had purchased over $500 million worth of Bitcoin, adding another layer of volatility and intrigue.
Bitwise cited the move as part of its rationale for launching IGME, saying, “GameStop’s return potential, historically high volatility, and recent adoption of bitcoin as a treasury asset make it a compelling choice for a covered call strategy.”
