BlackRock has registered a proposed Bitcoin downside-protection ETF that would seek to limit part of its exposure to Bitcoin-linked losses by sacrificing some upside gains, according to an Oct. 19 post-effective amendment filed with the U.S. Securities and Exchange Commission. The planned fund, identified by the ticker PBIT, remains in the application stage, with no management fee, total expense ratio, exchange venue, or trading date yet disclosed.
The filing outlines an options-based strategy built around the iShares Bitcoin Trust (IBIT) or comparable Bitcoin-linked exposure rather than direct Bitcoin holdings. PBIT would be organized under the Investment Company Act of 1940, placing it in a different legal and portfolio-management structure from IBIT, BlackRock’s spot Bitcoin trust.
Under SEC Rule 485(a)(2), the registration statement would become effective 75 days after the filing unless delayed, placing the expected effective date around Jan. 2, 2027. That milestone would allow the registration to take effect but would not by itself mean PBIT has begun trading. The filing does not identify a stock exchange or provide a listing timetable.
Options would define the fund’s risk profile
PBIT’s proposed portfolio would combine options tied to IBIT with fixed-income and cash-management holdings. Those holdings could include cash, money market funds, short-term U.S. government debt, and short-term investment-grade bonds.
The fund would generally use three overlapping options positions, called tranches, that would usually be launched about one month apart during a calendar quarter. As one tranche approaches expiration, the portfolio would add another. This rolling approach means shareholders would hold exposure to options established at different dates and at different Bitcoin-linked reference levels.
Each tranche would use a call spread, according to the filing. The fund would buy a call option with a strike price below the reference asset’s price when the position is opened, then sell another call option at a higher, out-of-the-money strike. Selling the second call helps pay for the purchased option, but it also limits the upside available from that tranche once the reference asset rises above the sold call’s strike price.
The design gives PBIT a defined outcome range for each individual tranche at its launch. It does not give the entire fund a single, permanent downside buffer or upside cap. Since the fund would hold several tranches at once, a shareholder purchasing PBIT on a given day would acquire a mixture of positions with different starting prices, expiry dates, protection levels, and upside limits.
That distinction could be especially relevant during sharp Bitcoin rallies. A tranche may have initially been structured to absorb a decline from its starting reference level, but a new shareholder who buys after IBIT or another reference asset has already risen substantially could face a much larger decline before the option’s protection level is reached.
The 10% figure applies only to a newly launched tranche
The prospectus describes a “roughly 10%” maximum loss exposure for an individual tranche at launch. That figure is based on an illustrative structure in which the purchased call option’s strike is set near 90% of the reference asset’s value when the tranche begins.
For example, if the relevant Bitcoin-linked reference asset starts at 100 and the protection level is 90, the first 10% decline would be the amount exposed under that tranche’s initial terms. Yet if the reference asset rises to 120 before another shareholder buys into the fund, the distance from that buyer’s entry point to the unchanged 90 protection level becomes 25%.
The filing explicitly states that the protection-start setting can change over time. BlackRock could use a level other than 90% for future tranches, depending on market conditions and portfolio decisions. Fees and expenses would also reduce returns and could deepen losses, while PBIT’s management fee remains blank in the current registration statement.
The expected instruments are primarily FLEX options, exchange-traded contracts with customizable terms. The filing says these options are expected to be European-style, meaning they can generally be exercised only at expiration. Before expiry, PBIT’s net asset value would reflect the market value of the options rather than a fixed final payout.
A new format alongside BlackRock’s spot Bitcoin trust
The proposed fund expands BlackRock’s Bitcoin product lineup beyond the direct spot exposure offered through IBIT. IBIT had approximately $65.70 billion in net assets as of Oct. 19, according to PBIT’s filing, and charges a 0.25% sponsor fee. It launched on Jan. 5, 2024.
For the period ended Sept. 30, 2026, the filing reported IBIT’s one-year return at negative 26.80%, its year-to-date return at negative 4.30%, and its since-inception return at 89.96%. Those figures illustrate why a product that exchanges part of Bitcoin’s open-ended upside for a degree of options-based loss mitigation could appeal to traders seeking a more defined risk range.
IBIT also recorded $665.16 million in net inflows on Oct. 19, according to SoSoValue. The blockchain-data platform reported that IBIT was the only one of 12 U.S. spot Bitcoin ETFs to record net inflows that day, and described the result as its largest single-day inflow since Oct. 7, 2025.
PBIT would add risks beyond the price movements associated with spot Bitcoin exposure. The filing identifies options valuation risk, FLEX options risk, counterparty and clearing-member default risk, cash-management risk, and non-diversification risk. It also flags tax questions surrounding the treatment of options positions. BlackRock expects to qualify the fund as a regulated investment company under Subchapter M, while noting that some options could receive Section 1256 mark-to-market treatment and other structures could trigger short-term gain or straddle-rule consequences.
BlackRock lists Erin Armstrong, Kyle McClements, and Richard Mejzak as PBIT’s portfolio managers, each with a 2026 start year. As a newly proposed fund, PBIT has no performance record or portfolio-turnover history.
The next filings will show whether BlackRock can translate the concept into a commercially competitive ETF. A disclosed fee, exchange listing, and tranche-level option positions would give traders the information needed to assess the effective downside buffer and upside ceiling available when they buy shares, rather than relying on the illustrative protection level presented for a newly opened tranche.
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