BlackRock's iShares Trust is preparing a bitcoin-linked ETF designed to limit losses during sharp downturns in exchange for giving up part of bitcoin's upside. A Form 485APOS filing for the proposed iShares Bitcoin Managed Protection ETF, expected to trade under the ticker PBIT, outlines an actively managed options strategy tied to the iShares Bitcoin Trust (IBIT) rather than direct holdings of bitcoin.
The fund is scheduled to launch in January 2027, according to the prospectus, though BlackRock did not provide a listing exchange, offering date, management fee, or total expense ratio in the filing. PBIT would be registered under the Investment Company Act of 1940 and would use FLEX options, customized exchange-traded options contracts, to create defined loss and gain ranges over successive investment periods.
The proposal expands BlackRock's bitcoin ETF lineup beyond straightforward spot exposure and income-oriented options products. Its structure would place a roughly 10% initial loss limit on each options position, while setting an upper ceiling on returns that would vary with market conditions when the options are opened.
A bitcoin-linked strategy with defined ranges
PBIT would not purchase bitcoin directly and would not hold bitcoin exchange-traded products, including IBIT. Instead, it would gain its exposure through FLEX options referencing IBIT, BlackRock's spot bitcoin ETF. Bank of New York Mellon would provide custody and administrative services, according to the prospectus.
The fund's bitcoin managed protection strategy combines a call spread with short-duration fixed-income investments. A call spread involves buying one call option and selling another at a higher strike price. The purchased call provides exposure to gains in the underlying reference asset, while the sold call helps pay for the position but limits gains above a predetermined level.
For each options tranche, the fund would generally buy an in-the-money call option with a strike price set around 90% of IBIT's reference price at the beginning of the tranche. If the reference price falls below that 90% level by the end of the period, the strategy's intended loss on that tranche would be approximately 10%, before fees and other fund expenses.
The fund would then sell a call option at a higher strike price. Premium received from that sale would reduce the net cost of buying the first call, but it would also cap the tranche's returns once IBIT rises above the sold call's strike.
BlackRock does not set a permanent upside limit in the prospectus. The cap would depend on the market price of IBIT, option pricing, interest rates and other conditions at the time each position is established. That leaves prospective shareholders able to identify the strategy's general trade-off, limited downside in exchange for limited upside, without knowing the eventual return ceiling before each tranche is opened.
Prospectus example shows the trade-off
The filing includes a simplified illustration using a starting reference price of 100, a purchased call strike of 90 and a sold call strike of 125. The example excludes management fees, expenses and interest income from fixed-income holdings.
Under those assumptions, a rise in the reference price to 140 would produce a return of about 25% for the tranche, even though the reference asset gained 40%. The sold call prevents the tranche from participating in gains above 125.
On the downside, the same example shows a loss of about 10% if the reference price falls to 80. The loss remains approximately 10% even if the reference price falls as far as 40, because the purchased call's 90 strike defines the illustrated protection level.
That protection applies to the strategy's options position over its stated period, rather than representing an unconditional guarantee against every loss. Fund fees, the performance of fixed-income holdings, changes in options values before expiration and the timing of a shareholder's purchase or sale could affect an individual shareholder's outcome.
Three tranches aim to reduce entry-point risk
Rather than opening its entire options exposure on one date, PBIT would divide the strategy into three tranches established on a staggered monthly schedule. Those positions would be rolled over as their respective option periods end.
The approach reduces the fund's dependence on a single bitcoin-market entry point. In a volatile asset, opening all positions shortly before a major move can produce sharply different results from opening them weeks later. Staggering the tranches means the fund would hold options with different starting prices, downside buffers and upside caps at the same time.
The trade-off is a more complicated return profile. Shareholders would receive a blended result from three positions rather than the clean outcome of a single call spread. A strong rally could leave some tranches capped sooner than others, while a decline could affect newer and older positions differently depending on their strike prices.
Alongside its option positions, PBIT would allocate assets to cash, money market funds, short-term U.S. Treasuries and short-term investment-grade bonds. Interest from those holdings is intended to help offset the net cost of the options strategy and provide an additional source of return. It would also introduce exposure to short-term rates and fixed-income instruments, although that portion of the portfolio would be far less volatile than bitcoin-linked options.
BlackRock adds another bitcoin ETF format
PBIT would become BlackRock's third bitcoin-related ETF initiative after IBIT and the iShares Bitcoin Premium Income ETF, or BITA. BITA, which launched in June, uses covered-call selling to generate income and similarly accepts limited upside as part of its design.
The proposed fund targets a different use case from a conventional spot bitcoin ETF. IBIT tracks bitcoin's price exposure without a built-in ceiling on gains or losses. PBIT would instead package an options-based range of outcomes for buyers seeking exposure to bitcoin-linked price movements but unwilling to absorb the full downside of a spot position over a defined period.
Comparable buffered ETF structures already trade in the United States, including Calamos CBOJ, FT Vest BFJA and Innovator QBF. PBIT would apply that established defined-outcome ETF approach to BlackRock's bitcoin product rather than to an equity index or another traditional market benchmark.
The timing coincides with sustained demand for U.S. spot bitcoin ETFs, though flows have varied month to month. SoSoValue data showed that U.S. spot bitcoin ETFs attracted approximately 3.52 billion dollars in net inflows during August, the largest monthly total of the year in the supplied data, lifting combined net assets from 76.29 billion dollars at the end of July to 99.61 billion dollars. The platform recorded about 2.6 billion dollars in net inflows in September and roughly 200 million dollars in net outflows in October as of publication.
IBIT's cumulative historical net inflows rose from about 63.1 billion dollars at the end of August to 66.24 billion dollars by October 26, according to SoSoValue. PBIT's proposed structure would give traders another route into that ETF ecosystem, with outcomes shaped less by bitcoin's full price swings and more by the option strikes BlackRock can secure for each monthly tranche.
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