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Use Cases - Ethereum Options
SMART CONTRACTS
Writing ETH call options
If you'd like to generate some additional income from your ETH, writing ETH calls may be the strategy you're looking for.
Do you have a target price at which you will sell if the ETH rises? You might use a limit order to sell the ETH at a higher price, and then wait to see if you get a fill. But there’s another way you could consider. Using options, you can receive money today for your willingness to sell your ETH at a higher price.
If the ETH price remains unchanged, you keep your ETH and the premium you received from selling the call. If the ETH price declines, and the loss is greater than the premium you received, you keep your ETH as well as the premium.
Remember, as the owner of ETH, you still have all the downside risk associated with the price of ETH. However, if the ETH price rises above the strike price before expiration, you can be obligated to sell your ETH at the strike price, and keep the premium received.
Example
Let’s assume ETH is currently trading for $190. You would like to sell 200 ETH if it rises to $200. You could place a limit order to sell 200 ETH at $200 and wait to see if you sell your ETH. Or, you could sell 200 options with a $200 strike price at a $9 premium and collect $1,800 on your willingness to sell your 200 ETH at $200. By selling the covered call, you will generate income on ETH by collecting premiums for your willingness to be obligated to sell your ETH at $200.
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Buying ETH call options
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Last modified 1yr ago
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