Someone mentioned this huge dividend in a earlier thread. Done a little research and I can't understand out how in the world they pay any dividend.
What's going on with this thing?
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Posted by RidiculousHype

St. George, LA

Member since Sep 2007

10375 posts

Posted on 5/13/24 at 2:10 pm to bigjoe1

It has to do with BTC futures contracts getting rolled over. They won't issue a dividend every month; only when BTC goes up a lot.

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Posted by tenderfoot tigah

Red Stick

Member since Sep 2004

10948 posts

Posted on 5/16/24 at 6:43 pm to RidiculousHype

Are there risks associated with holding Bitcoin futures contracts vs holding Bitcoin in my crypto wallet?

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Posted by 98eagle

Member since Sep 2020

2146 posts

Posted on 5/16/24 at 7:29 pm to RidiculousHype

quote:
They won't issue a dividend every month; only when BTC goes up a lot.

That's not totally true, although I do agree that BITO's dividend should be better the higher and faster that Bitcoin climbs. Also, BITO's decay should be less as long as Bitcoin is climbing or falling. Worst case for BITO would be if Bitcoin never changed in price. The dividend would go to zero and it would only decay slowly in price as Bitcoin remained stable. ProShares has to be able to make money rolling futures contracts and they need volatility to make money.

I can't explain it, but in the month of April, Bitcoin dropped approximately $7K. Bitcoin, the Spot ETFs and BITO all dropped about the same percentage from April 1st to April 30th. I was expecting BITO to pay a much smaller dividend on May 8th for the April performance, but instead BITO paid it's biggest percentage monthly dividend ever (equating to an annualized yield of approximately 80% if you based it just on this one dividend).

This post was edited on 5/16/24 at 8:06 pm

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