Here’s how to properly earn a DeFi sized yield trading Bitcoin options

Here’s how to properly earn a DeFi sized yield trading Bitcoin options


I recently caught wind of an interesting Cointelegraph article explaining how investors could earn 41% APY on their Bitcoin without converting it to renBTC or WBTC.

In the article, the writer laid out a detailed case for generating yield on Bitcoin (BTC) holdings by investing in options markets instead of decentralized finance (DeFi) apps.

While we are proponents of this exact strategy some of the explanations laid out in the article are more confusing than useful so I want to add a little clarity to the best way to execute this strategy.

How Do Covered Calls Work?

In the article, the author describes a covered call strategy as consisting of “simultaneously holding BTC and selling the equivalent size in call options.”

When selling the calls against your long BTC you receive the call premium, which is the price the buyer pays for the option to buy BTC at the strike price specified in the call option contract. The returns

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