As the crypto market gradually matures, institutional investors’ tool choices for risk management are also continuously evolving. Digital asset derivatives trading company STS Digital pointed out that more and more institutions are systematically applying mature strategies long used in Bitcoin options trading to other cryptocurrencies and altcoins, in order to hedge price volatility risks and generate additional returns.
Maxime Seiler, co-founder and CEO of STS Digital, stated that their clients include token project teams and foundations, large-scale investors, and asset management companies conducting risk management before liquidity events. These participants are migrating classic Bitcoin options strategies such as covered call writing, put selling, and options hedging to a broader range of crypto assets.
Mechanically, options give the buyer the right, but not the obligation, to buy or sell an asset at an agreed-upon price in the future, while sellers earn option premiums and assume price fluctuation risks. For institutions holding spot assets long-term, selling covered call options is a common operation, allowing them to earn stable option income without reducing their holdings. Since the market experienced intense volatility in early 2020, such covered call strategies have been an important tool for institutions managing Bitcoin positions.
Currently, this model is being replicated in the altcoin market. Seiler pointed out that after altcoins experienced a sharp decline on October 10th, accompanied by automatic deleveraging mechanisms triggered by exchanges, institutional investors have placed greater emphasis on expressing risk exposure through options. Compared to high-leverage spot or futures trading, options are more controllable in extreme volatility environments.
In addition to covered call options, institutions widely use put selling to generate income, buy put options for downside protection, and buy call options to participate in potential rebounds with limited risk. These strategies are becoming an important part of altcoin risk management and yield enhancement.
As a regulated digital asset trader, STS Digital offers options, spot, and structured product quotes for over 400 cryptocurrencies, and settles dozens of billions of dollars in altcoin options trading annually through bilateral transactions. Seiler expects that in the coming years, the trend of expanding Bitcoin options strategies to other tokens will continue, and options are expected to become one of the core tools for institutions to manage crypto asset exposure, especially during market consolidation and low-volatility phases, where they are seen as an ideal window for strategic positioning.
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