Strategy · Income
COVERED CALLS ON BTC/ETH (DERIBIT)
NeutralDefined riskAdvanced
Overview
Hold spot BTC or ETH and sell out-of-the-money calls on Deribit to collect premium. Generates 1-4% monthly yield in flat or modestly bullish markets.
Setup
- 1.Hold the underlying (1+ BTC or 10+ ETH) and transfer to Deribit as collateral.
- 2.Sell weekly or monthly calls 10-20% out-of-the-money.
- 3.Target options with implied volatility >60% for meaningful premium.
- 4.If price approaches the strike, roll the call up and out for additional credit.
- 5.Avoid selling around major catalysts (FOMC, halving, ETF decisions).
- 6.Track effective yield vs. just holding spot — only continue if you're net ahead.
Max profit
Premium collected plus appreciation up to the strike, repeated each cycle.
Max loss
Opportunity cost of capped upside if the asset rallies past the strike; full loss on exchange failure.
Breakeven
Spot price minus premium collected.
When to use
After strong rallies when IV is elevated and you expect a cooling-off period.
When to avoid
Before known bullish catalysts. When IV is below 40% — premium is too thin to justify the cap.