What is the definition of a covered call in the context of cryptocurrency trading?

3 answers

• H.asewOct 24, 2024 · 9 months ago
  A covered call is a trading strategy where an investor holds a long position in a cryptocurrency and sells call options on that cryptocurrency. This strategy is considered 'covered' because the investor already owns the underlying asset (cryptocurrency) and can deliver it if the call option is exercised. By selling call options, the investor earns premium income, which can offset potential losses if the price of the cryptocurrency decreases. It's a way to generate additional income from an existing cryptocurrency holding.
  527

  264
• forjanenSep 03, 2020 · 5 years ago
  Sure! So, a covered call in cryptocurrency trading is like renting out your crypto. You own the crypto and you're selling someone the right to buy it from you at a specific price in the future. If the price goes up and the buyer exercises the option, you have to sell your crypto at that price. But hey, you still get to keep the premium you earned from selling the option, so it's not all bad. It's a way to make some extra cash while holding onto your crypto.
  461

  154
• Mara KhithieSep 22, 2022 · 3 years ago
  In the context of cryptocurrency trading, a covered call is a strategy where an investor sells call options on a cryptocurrency they already own. This strategy is commonly used to generate income from the cryptocurrency holdings. By selling call options, the investor receives a premium upfront and agrees to sell the cryptocurrency at a predetermined price (strike price) if the option is exercised. This strategy can be beneficial in a sideways or slightly bullish market, as it allows the investor to earn income while still participating in potential upside gains.
  568

  142