XRP Option Income ETF: A Strategic Income Play in the Altcoin Era

The XRP Option Income ETF, proposed by Amplify Investments, represents a novel approach to structured income generation in the altcoin era. By leveraging a covered call strategy on XRP-linked financial instruments, the fund aims to deliver consistent monthly returns while maintaining exposure to XRP’s price movements. This strategy mirrors Amplify’s successful Bitcoin income ETF (BAGY), which has demonstrated the viability of options-based income strategies in volatile crypto markets [1].

The ETF’s structure allocates 80% of assets to XRP-linked instruments (such as ETPs and options) and 20% to U.S. Treasuries or cash equivalents, creating a risk-managed framework for income generation [2]. By selling call options—typically 5–10% out of the money with short maturities—the fund collects premiums that act as a buffer against price declines. However, this approach caps potential gains if XRP surges beyond the strike price of the sold options [3]. The 0.65% expense ratio, while competitive in traditional markets, may impact returns during low-volatility periods [1].

Regulatory tailwinds further bolster the ETF’s prospects. The SEC’s recent approval of in-kind creation and redemption mechanisms for crypto ETFs has created a more favorable environment, and prediction markets estimate an 84% chance of XRP ETF approval in 2025 [3]. With 16 XRP ETF applications pending—including seven spot ETFs from major firms like Grayscale and Bitwise—the regulatory landscape is shifting toward structured crypto products [4].

To contextualize the XRP ETF’s potential, consider Amplify’s Bitcoin income ETF (BAGY). Launched in April 2025, BAGY employs weekly call options to generate annualized premiums of 30–60% while offering up to 5% Bitcoin price appreciation weekly [5]. As of June 2025, BAGY has delivered a 4.81% dividend yield over 12 months and a one-month return of 8.39%, despite a maximum drawdown of 6.55% [6]. These metrics highlight the efficacy of options-based strategies in balancing income and volatility.

Critics argue that the XRP ETF’s capped upside and expense ratio could limit returns during prolonged bull markets. However, the fund’s structured approach—combining income generation with risk mitigation—aligns with growing institutional demand for passive crypto income solutions, particularly in a post-Fed environment where traditional yields are scarce [7]. Amplify’s $12.6 billion in assets under management across blockchain-related ETFs further validates the firm’s credibility in this space [2].

In conclusion, the XRP Option Income ETF offers a strategic bridge between altcoin exposure and income generation. While risks such as regulatory delays and market volatility persist, the fund’s alignment with broader trends in crypto innovation and institutional adoption makes it a compelling play for investors seeking structured returns in the altcoin era.

Source:
[1] The Amplify XRP Option Income ETF: A Strategic Play for Income-Seeking Crypto Investors
[2] Amplify Eyes SEC Approval for First XRP Option Income ETF
[3] XRP News Today: "Amplify's XRP ETF Gambit: Income-Driven Crypto, Regulators, and Retirees"
[4] Amplify files for XRP Option Income ETF as proposals for altcoin-based funds pile up
[5] BAGY
[6] Amplify Bitcoin Max Income Covered Call ETF (BAGY)
[7] XRP's Evolving Utility and Passive Income Potential in 2025