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ZEC ZCSH exceeded US$500 million in management after its initial launch. Options trading boosted Zcash's strategic gains.
ZCSH was launched on August 25. As the first exchange-traded product to provide spot ZEC (Zcash) exposure, its asset management scale (AUM) now exceeds US$500 million. The fund recorded inflows of more than US$70 million, while DCG International Investments contributed approximately US$100 million in exchange for 85,705 ZEC shares.
Zcash's average volatility of up to 140% supports option premiums, with the covered call strategy implying an annual return of approximately 70%.
Zcash's high volatility drives up option premiums
According to data from Zach Pandl, head of research at Grayscale, Zcash's average volatility over the past year was about 140%, while Bitcoin's average volatility was about 40%. Looking back at its early history, Zcash's annualized volatility was close to 125%.
Source: Grayscale
Grayscale notes that Zcash's market cap is about 1% of Bitcoin's. At current volatility levels, the hypothetical Zcash covered call strategy implies an annualized return of approximately 70%. In contrast, Bitcoin's covered call option strategy offers an annualized yield of only about 30%. However, it should be noted that when the spot price falls more than the royalties charged, the covered call strategy may lead to capital losses.
ZCSH opens options trading in NYSE Arca
As ZCSH's asset management scale exceeded the US$500 million mark, its options trading officially opened on NYSE Arca earlier today. ZCSH was launched on August 25, becoming the first product to provide spot ZEC exposure. According to the announcement, it is still the only exchange-traded product that provides spot ZEC exposure.
Investors can access ZEC through a brokerage account without having to directly purchase or hold the asset. About US$100 million in management scale comes from DCG International Investments Ltd. The investor obtained the corresponding share by depositing 85,705.32563297 ZECs.
Grayscale outlines ZEC risk management tool
The transaction is a follow-up to previous discussions about an investment of approximately US$100 million. These shares do not have priority characteristics and enjoy the same economic rights and interests as other ZCSH shares. Steve Vanourny, head of Grayscale indices, said that in the two weeks since its listing, cumulative inflows have exceeded $70 million.
DCG International Investments is an indirect wholly-owned subsidiary of Digital Currency Group. DCG is the indirect parent of Grayscale Investments Sponsors, LLC, the fund's promoter. Its affiliates may sell ZEC and TAO to pay fees, make investments, hedge risk or gain gains.
They may also trade more ZCSH shares. Pandl said investors seeking clarity on investment outcomes could consider building a structure for buying call and put options. Launched in 2016, Zcash has a supply cap of 21 million coins and uses a Proof-of-Work consensus mechanism. Users can conduct transparent or private transactions while viewing keys to allow selective disclosure.
