The Calamos Bitcoin Structured Alt Protection ETF, trading under the ticker “CBOJ,” has recently entered the market, promising a unique investment strategy that combines safety with exposure to bitcoin.
This ETF guarantees that investors will not lose money over the next year, despite the inherent volatility of bitcoin, which has an average annual volatility of 86%. However, this protection comes at a cost: the maximum return is capped at 11.65%, which is significantly lower than the potential gains bitcoin has historically offered.
1. Understanding Bitcoin’s Performance
Bitcoin has a history of dramatic price changes, often exceeding the 11.65% cap set by CBOJ.
Since 2016, there have been numerous instances where bitcoin has risen more than this amount in a single day. The chart below illustrates the frequency of various one-year changes in bitcoin prices, highlighting that rises greater than 50% occur more often than one might expect.
This data suggests that while CBOJ offers a safety net, it may not align with the aggressive growth potential that many investors seek from bitcoin.
2. Comparing with the S&P 500
Similarly, the S&P 500 has historically outperformed the caps set by max-buffer ETFs, including those like CBOJ. The following chart shows the frequency of various one-year returns for the S&P 500, indicating that returns greater than 14% occur more often than the caps offered by many structured products.
This data reinforces the argument that traditional investments like the S&P 500 may provide better long-term returns compared to structured products that limit upside potential.
3. Conclusion: Weighing Risks and Rewards
While the Calamos Bitcoin Structured Alt Protection ETF offers a unique approach to investing in bitcoin with downside protection, it may not be the best choice for those seeking significant returns.
Investors should carefully consider their risk tolerance and investment goals, as traditional investment strategies may yield better results over time. Balancing safety with growth potential is crucial in making informed investment decisions
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