BlackRock has filed with the U.S. Securities and Exchange Commission (SEC) to launch a new Bitcoin-linked ETF designed to limit some losses when prices fall while also capping potential gains when prices rise.
The proposed iShares Bitcoin Managed Protection ETF would trade under the ticker PBIT if its registration becomes effective and the fund launches. Instead of holding Bitcoin directly, it would use options linked to BlackRock’s iShares Bitcoin Trust ETF (IBIT) and other Bitcoin-related instruments.
The strategy aims to give investors some exposure to Bitcoin’s price movements while providing a degree of downside protection. However, the fund would not guarantee a fixed limit on losses, and investors could lose a substantial portion or even all of their investment.
How BlackRock’s proposed Bitcoin protection ETF would work
According to BlackRock’s October 19 filing, PBIT would combine Bitcoin-linked call options with cash and short-term fixed-income investments.
The fund plans to buy call options at certain prices and sell other call options at higher prices. The purchased options would provide exposure to potential price increases, while selling the higher-priced options would help cover costs but limit the gains investors could receive.
PBIT would use three overlapping groups of options, known as tranches. Each group would generally begin at a different point during the calendar quarter, giving the fund exposure through options established at different reference prices.
For a typical tranche, BlackRock expects to purchase options with an exercise price around 10% below the reference asset’s value when the tranche begins. This creates an initial downside exposure of approximately 10% before fees and expenses, but it does not mean investors can never lose more than 10%.
The fund’s actual performance would depend on the options it holds, their expiration dates, market conditions and the weight of each tranche in the overall portfolio.
PBIT will not hold Bitcoin directly
Unlike a traditional spot Bitcoin ETF, PBIT does not plan to hold Bitcoin or Bitcoin exchange-traded products directly.
Instead, it would use options linked to IBIT or similar Bitcoin-related instruments. The remaining assets would be invested in cash, money market instruments, short-term government securities and other eligible fixed-income investments.
This means PBIT’s returns could differ substantially from those of Bitcoin or IBIT. The fund’s options would determine how much of Bitcoin’s price movements reach shareholders.
BlackRock also plans to use flexible exchange options, commonly known as FLEX options. These allow certain contract terms to be customized. The fund may also use standard exchange-traded options.
One tranche would generally expire each month while another is added. This rolling structure would create multiple options positions with different starting values, protection levels and potential gains.
The fund’s fixed-income investments could generate interest income to help cover options costs. However, that income would not eliminate the risks associated with the strategy.
The 10% protection level is not a guaranteed loss limit
BlackRock’s filing makes clear that the proposed protection mechanism has important limitations.
Consider a hypothetical tranche established when its reference asset is worth $100. If the purchased call option has an exercise price of $90, the difference represents an initial 10% range.
But if the reference asset later rises to $120, a decline to $90 would represent a 25% loss from that higher value. The original protection level would not automatically move upward just because the reference asset had gained value.
The fund also holds overlapping tranches, each with its own starting value and options structure. As a result, PBIT shareholders would have exposure to a combined portfolio rather than one fixed protection level.
Fees and operating expenses would further affect returns. The prospectus also warns that unusual market conditions could cause the options and fixed-income investments to perform differently than expected.
BlackRock has not yet disclosed PBIT’s management fee, listing exchange or confirmed trading date.
BlackRock expands its Bitcoin ETF lineup
PBIT would add another type of Bitcoin investment product to BlackRock’s existing lineup.
The asset manager launched the iShares Bitcoin Premium Income ETF, known as BITA, in June 2026. That fund uses an options strategy designed to generate income while maintaining exposure to Bitcoin-related price movements.
BITA began trading on Nasdaq on June 16. Its strategy involves selling call options to collect premiums, giving it a different objective from PBIT’s proposed focus on limiting some downside exposure.
BlackRock’s earlier filing for BITA disclosed a sponsor fee of 0.65%. That fee should not be assumed for PBIT because its new filing does not specify a management charge.
The options market around IBIT has also expanded. In July, the SEC approved an increase in certain IBIT options position and exercise limits from 250,000 to 1 million contracts.
Bloomberg Intelligence analyst James Seyffart identified PBIT as another Bitcoin ETF proposal from BlackRock. He noted that investors would give up some potential gains in exchange for a degree of downside protection.
The new fund would be registered under the Investment Company Act of 1940, according to the filing.
PBIT has not yet received a confirmed launch date
BlackRock’s October 19 filing describes a proposed fund, not an ETF that is already available to investors.
The registration must become effective before the securities can be sold. The preliminary prospectus does not identify a confirmed exchange listing date, and the final options caps and portfolio allocations have not yet been specified.
The company says the fund’s protection levels and tranche weights will be provided through iShares once the relevant positions are established.
Overall, PBIT would offer a different way to gain Bitcoin-related exposure by combining options with cash and fixed-income investments. Its main trade-off is straightforward: investors would seek some protection against falling prices but would also give up part of the potential gains if Bitcoin rises. The strategy would not eliminate investment risk or guarantee a maximum loss.