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What Is the Practical Difference between a Covered Call and a Naked Call Strategy in Crypto?

Covered calls hedge the short option with the underlying; naked calls have unlimited loss risk and require high margin.
Greeks.Live15.11.25

What Is the Practical Difference between a Covered Call and a Naked Call Strategy in Crypto?

A covered call involves owning the underlying cryptocurrency (e.g. BTC) for every call option sold, thereby "covering" the obligation to sell.

This strategy limits upside potential but generates premium income. A naked call involves selling the call option without owning the underlying asset.

This exposes the trader to unlimited loss if the asset price rises sharply, but offers a higher premium income potential. Naked calls are significantly riskier and require higher margin.

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