Traders commonly use covered calls to generate yield or income on their bitcoin holdings. The trader collects premium for selling the call option while maintaining their long bitcoin position (with risk of selling their bitcoin position if bitcoin price rises above the strike price).
Covered Call = Long bitcoin + Short call option
You are selling someone else the right to buy bitcoin that you own (hence “covered”) at the strike price on the expiration date. You receive a premium in USD when you sell the covered call.
On FTX US Derivatives, 1 contract = 0.01 BTC. So you can sell 1 covered call option for every 0.01 BTC you own, or can sell 100 covered calls for every 1 BTC you own. The bitcoin must be deposited to your FTX US Derivatives account to make the trade.
Trading Covered Calls
- Select the option you want to trade on the options chain
- Enter the Quantity
- Review or Edit the Price. The top bid is the current highest price you can receive for selling the option
- Press Sell and review your order
See Sell Call Options for more details on selling call options on FTX US Derivatives.