How does covered call writing work in the context of cryptocurrency investments?

1 answers

• Healthy Fresh FoodNov 30, 2025 · 23 days ago
  Covered call writing is a popular strategy in traditional finance, and it can also be applied to cryptocurrency investments. The idea is to sell call options on a cryptocurrency that you already own, allowing you to earn income from the premiums. If the price of the cryptocurrency remains below the strike price of the options, you keep the premium and can continue to sell options. However, if the price rises above the strike price, you may be obligated to sell your cryptocurrency at a lower price. This strategy can be a way to generate income in a sideways or slightly bullish market, but it does limit potential gains if the price of the cryptocurrency increases significantly. It's important to carefully consider your investment goals and risk tolerance before implementing this strategy.
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