Amplify ETFs Introduces XRPM: The First XRP-Linked Income Fund

TLDR

• Amplify ETFs has launched the XRPM, the first XRP-based income-focused exchange-traded fund.
• XRPM seeks to generate 36% annualized option premiums, targeting 3% per month through an actively managed strategy.
• The ETF splits its portfolio into two components, with 30% to 60% in covered calls and the remainder in long-only positions.
• XRPM uses weekly out-of-the-money call options to capture premium income while allowing some upside in XRP’s price.
• The ETF aims to provide income while benefiting from XRP’s price movements and growth potential.

Amplify ETFs has introduced the Amplify XRP 3% Monthly Premium Income ETF (XRPM), the first fund based on XRP. This new product expands Amplify’s YieldSmart ETF lineup, focusing on options strategies to generate income. The fund seeks to provide a steady income stream while capturing limited upside potential from XRP’s price movements.

XRPM ETF Targets 36% Annualized Option Premium

The XRPM ETF targets an annualized option premium of 36%, aiming for 3% per month. The fund uses an actively managed covered call strategy to collect premiums. It seeks to balance high income with partial upside from XRP’s price fluctuations.

The ETF divides its portfolio into two main parts. The first part is the covered call portion, which comprises 30%-60% of the total portfolio. The second part is the long-only segment, which holds the remaining percentage and allows for greater upside potential.

On the covered call side, the fund writes weekly out-of-the-money call options. This strategy aims to generate income by capturing a premium while allowing some price appreciation within the strike range. The long-only portion ensures the ETF captures larger gains if XRP rises sharply.

Using weekly contracts instead of monthly options increases the number of premium-collection opportunities. This strategy allows XRPM to target more frequent income streams, improving its potential for higher returns. The ETF’s approach aims to offer a unique way to capitalize on XRP’s price movements.

Amplify XRP ETF Targets Growing Market in Digital Assets

XRP has seen growing adoption and is currently the fourth-largest cryptocurrency by market capitalization. The digital asset serves as the native currency of the XRP Ledger, a global payments network. XRP’s use extends beyond payments into tokenized assets and decentralized finance applications.

Amplify’s CEO, Christian Magoon, expressed excitement about the launch.

The new fund aims to offer a unique way to access XRP’s potential growth while benefiting from regular income.

XRPM does not invest directly in XRP. Instead, the fund’s returns are tied to option strategies based on XRP’s price exposure. The ETF targets steady income generation through the covered call strategy while capturing XRP’s price dynamics.

Amplify ETFs has partnered with Kelly Strategic Management LLC and Penserra Capital Management LLC as sub-advisers. These firms will help manage XRPM’s complex investment strategy. The ETF’s investment strategy may adjust depending on market conditions, with premium targets reflecting these changes.

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