How does a covered call strategy work in the context of digital currencies?

1 answers

• Daniela ChamorroJun 06, 2025 · a month ago
  A covered call strategy in the context of digital currencies is a popular options trading strategy that allows investors to generate income from their digital currency holdings. The strategy involves selling call options on the digital currency that you already own. By selling these options, you receive a premium, which is the price that the buyer pays for the option. If the price of the digital currency remains below the strike price of the option, the option will expire worthless, and you keep the premium. If the price rises above the strike price, the option may be exercised, and you would sell your digital currency at the strike price, plus keep the premium. This strategy can be an effective way to generate income in a sideways or slightly bullish market, as it allows you to profit from the premium income while still benefiting from any potential upside in the digital currency's price. However, it's important to note that this strategy does have risks, and it's important to carefully consider your risk tolerance and investment goals before implementing it.
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