How Does the ‘Covered Call’ Strategy Generate Income on a Long Crypto Position?

The Covered Call strategy generates income by selling (writing) a Call Option against a long position in the underlying cryptocurrency. The income is the premium received from the option buyer.

This premium is kept by the seller regardless of whether the option is exercised or expires worthless. This strategy is used to earn a yield on a crypto holding, particularly in sideways or moderately bullish markets, in exchange for capping the potential upside profit.