Grayscale Launches Ethereum Covered Call ETF as Money Rushes Into ETH Funds

The new ETF, which began trading last week under the ETCO ticker, aims to use an options strategy to generate income.

Sep 3, 2025, 6:00 p.m.

Grayscale, the world’s largest digital asset investment manager, has launched a new exchange-traded fund that ties into ether's (ETH) recent market momentum.

The Grayscale Ethereum Covered Call ETF (ETCO) began trading Thursday, offering exposure to ether with an options-writing strategy designed to generate steady income.

The launch comes as ether, the native token of the Ethereum blockchain, has outperformed bitcoin BTC$112,161.51 in 2025, rising 34% year-to-date versus BTC's 20%

Behind the gains is renewed retail and institutional interest, evidenced in August by surging inflows into the spot ETH ETFs that dwarfed those which headed into the BTC funds.

Wall Street firms have increasingly adopted the blockchain to streamline processes in their trading and settlement systems, creating a flow of capital into the asset that has lifted demand across both spot and derivative markets.

ETCO aims to capture that interest while providing a buffer against volatility. The fund systematically sells call options on Ethereum-linked exchange-traded products such as the Grayscale Ethereum Trust ETF (ETHE) and Grayscale Ethereum Mini Trust ETF (ETH). The premiums generated from those options are distributed to shareholders on a bi-weekly basis, making ETCO an “income-first” strategy that may appeal to investors seeking cash flow.

“Grayscale Ethereum Covered Call ETF is designed to complement an investor’s existing Ethereum exposure by adding an income component,” said Krista Lynch, senior vice president of ETF capital markets at Grayscale.

Covered call strategies are common in equities, where they help investors monetize volatility while potentially reducing downside risk. Grayscale is applying the same logic to crypto markets, where ether’s price swings and liquidity create opportunities for option premiums.

The fund’s primary goal is generating current income, with a secondary aim of capturing ether-linked returns. By writing call options close to the spot price, ETCO seeks to turn the token’s volatility — which often deters traditional investors — into a source of yield.

This product joins a growing line of income-focused crypto funds at Grayscale, which already includes the Bitcoin Covered Call ETF (BTCC) and the Premium Income ETF (BPI).

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