Amplify launched the Amplify XRP 3% Monthly Premium Income ETF (XRPM), the first options income ETF based on XRP, listed on Cboe BZX and registered with DTCC. The fund proposes to generate up to 3% monthly through a synthetic covered calls strategy on ETPs linked to XRP, an option aimed at investors seeking crypto-linked income. XRPM targets periodic income while maintaining exposure to XRP through an options-based approach described in its prospectus.
XRPM —Amplify XRP 3% Monthly Premium Income ETF— combines exposure to XRP with systematic premium selling to produce income, according to the prospectus. The vehicle aims to distribute 3% monthly (equivalent to a 36% annualized under steady conditions) by writing weekly options, normally with strikes between 5% and 10% above the spot price. The options are in many cases European-style or FLEX; FLEX Options allow customization in terms of expiration and exercise.
The strategy employs partial coverage: under normal conditions, approximately 30%–60% of the portfolio is covered by the weekly calls and the remainder (40%–70%) remains uncovered to maintain some participation in XRP upside. Amplify writes options on ETPs related to XRP (including potential spot ETFs and futures), which allows navigating regulatory limitations of the digital asset market, according to the documentation.
Strategy and construction of the options income ETF on XRP
Initial specifications provided in the prospectus state the primary exchange is Cboe BZX, with CUSIP 032108375, initial net assets of $750,000, 30,000 shares at launch, an expense ratio of 0.75%, and subadvisors Kelly Strategic Management, LLC and Penserra Capital Management LLC.
The sale of calls limits upside potential: any appreciation above the strike becomes the collected premium, imposing a cap on upside participation. The fund maintains full exposure to XRP declines, so capital losses can exceed the premiums received. Income generation is variable: the 36% annual projection depends on volatility and market intent at the start of the strategy and is not guaranteed.
The strategy incorporates structural risks inherent to ETFs and derivatives, including concentration of Authorized Participants, lower liquidity in FLEX Options compared to standardized options, and dependence on the liquidity of the underlying ETPs. There is also regulatory risk from the evolution of regulatory frameworks that could affect the fund’s operation and liquidity.
The arrival of XRPM marks a new way to transform XRP volatility into periodic flows, offering a tool designed for income-oriented investors, albeit with clear limits on capital appreciation and exposure to losses.
