Many Bitcoin holders are long-term bullish and do not plan on selling their bitcoin in the near-term, or even the long-term. But why not earn a bit of return on your holdings? Deribit, a crypto derivatives trading platform, allows you to do just that with very little risk.
A well-known options strategy in traditional financial markets is the out of the money covered call. It’s suitable when the asset holder is long-term bullish on the underlying asset, but in the near-term is not so bullish, or neutral. It’s considered an advanced strategy but it’s actually quite simple. Here’s how it works:
- Send some Bitcoin to Deribit to cover the position you will open. For example, ONE Bitcoin.
- Decide on a strike price and date that you think will not put your Bitcoin at risk of being called away. For example, Bitcoin is currently at $6000, and you think the price will stay below $10,000 for 3 months.
- Find the option that matches your outlook and sell (write) one call.
- Collect your premium if/when the options contract expires below the strike price on the date of the contract.
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