How can I use otm covered calls to generate passive income from my cryptocurrency holdings?

3 answers

• Brooke Westhafer Brooke hensonJun 17, 2025 · a year ago
  Sure! Using out-of-the-money (otm) covered calls is a strategy that can help you generate passive income from your cryptocurrency holdings. Here's how it works: First, you need to own the underlying cryptocurrency. Then, you sell call options with a strike price higher than the current market price of the cryptocurrency. This means that the call options are out-of-the-money. By selling these call options, you collect a premium. If the price of the cryptocurrency remains below the strike price until the options expire, you keep the premium as profit. However, if the price of the cryptocurrency rises above the strike price, the buyer of the call options may exercise them, and you would have to sell your cryptocurrency at the strike price. This limits your potential gains but allows you to generate passive income through the premium collected from selling the call options.
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• dreamiesAug 16, 2023 · 3 years ago
  Using otm covered calls to generate passive income from your cryptocurrency holdings can be a smart strategy. By selling call options with a strike price higher than the current market price, you can collect a premium and potentially earn income even if the price of the cryptocurrency doesn't increase significantly. However, it's important to understand the risks involved. If the price of the cryptocurrency rises above the strike price, you may have to sell your cryptocurrency at a lower price than the market value. Additionally, market conditions and volatility can impact the profitability of this strategy. It's recommended to consult with a financial advisor or do thorough research before implementing this strategy.
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• Phạm Thế SơnMar 29, 2021 · 5 years ago
  Using otm covered calls is a popular strategy among cryptocurrency traders to generate passive income. Platforms like BYDFi offer options trading services that allow you to sell call options on your cryptocurrency holdings. By selling otm covered calls, you can collect premiums and earn income even if the price of your cryptocurrency doesn't increase significantly. However, it's important to carefully consider the risks involved, such as potential losses if the price of the cryptocurrency rises above the strike price. It's always a good idea to do your own research and consult with professionals before engaging in options trading.
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