Covered calls
Selling Covered Calls on Borrowed Bitcoin: Strategic Yield with Asymmetric Risk
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On May 25, 2025, we executed a position that perfectly illustrates a niche but compelling setup in the crypto derivatives space. We:
Borrowed 0.01 BTC (worth $1,080 at the time),Posted 0.54 ETH as collateral (worth $1,350),And sold a cash-settled call option on 0.01 BTC with a strike price of $110,000,Collecting a premium of $17 with weekly expiry (May 30).Let’s break down the rationale, benefits, risks, and variations of this strategy — and why, despite its synthetic nature, it can be a valuable tool in Terramatris' option yield strategies.
The Core StrategyThe basic idea is…
How to Sell a Synthetic Covered Call on ETH
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At TerraMatris Crypto Hedge Fund, we actively deploy a range of options strategies to generate income and manage directional exposure. Today, I want to share an elegant and capital-efficient technique we’re using: the synthetic covered call—a method that replicates the payoff profile of a traditional covered call, without the need to hold the underlying crypto asset.
What Is a Synthetic Covered Call?Traditionally, a covered call involves owning a crypto asset (like ETH) and selling a call option against it. This generates premium income while capping upside beyond the strike price.…