Nick Forster, CEO of the crypto options platform Derive, wrote an article titled " Yieldmaggedon ," arguing that the era of easily achieving 20-30% annualized returns in the crypto world is over, and advocating for the use of options as a transparent and risk-controlled source of returns. Selling options has long been an effective way to achieve scalable returns in traditional finance, and it's also how casinos and insurance companies use probability strategies to generate profits. This article will introduce several strategies for selling options to create a stable source of returns.
The apocalypse of crypto yields is here; the era of easy money is over.
Nick believes the era of easy money in the cryptocurrency space is over—the end of easy profits has arrived. You can no longer obtain near-risk-free returns of over 30% through methods like airdrops and basis trading.
Many protocols and products designed to capture delta-neutral, high-yield trades are now struggling to maintain their user base and revenue in a more challenging environment.
Currently, the APY of mainstream DeFi is only 4.5%, which is similar to the yield of US Treasury bonds, which are almost risk-free in traditional finance, and seems to have lost its appeal.
Selling options: a new source of stable returns in the crypto world
Nick advocates for the use of options as a transparent and risk-aware source of returns. He was a stock options trader at Susquehanna and is now a co-founder of Derive (formerly Lyra), a decentralized options platform for Bitcoin and Ethereum.
For decades, selling options has been an effective way to achieve scalable returns in traditional finance and a tool used by most institutional investors for the following reasons:
- You decide for yourself the specific risks you want to take and the corresponding rewards.
- Risks are clear and transparent
- Collateral can be used to generate income.
Casino and insurance company profit-making strategies: Selling options
Nick's idea is similar to that of " The Complete Guide to Option Sellers: Building Stable Return Strategies, Mastering Everything from Basics to Advanced Techniques ," which I recently studied.
The book's preface points out that casinos and insurance companies profit from probability, a strategy exemplified by selling options . Statistics show that 80% of options become worthless upon expiration. While this may be due to investors choosing to exit early, it also suggests that sellers are the true winners in the market; otherwise, why would institutions like insurance companies exist?
The key point is that time is on the seller's side because options have "time value," which gradually diminishes as the expiration date approaches, eventually becoming zero. This means that if the market remains flat (neither rising nor falling), the value of the options held by the buyer will decrease, while the seller will successfully earn the premium. This is precisely why, statistically, most options become worthless at expiration, making the seller the long-term winner.
Several common options selling strategies
The following are some common options strategies selected by the author, all based on Bitcoin and referenced to Deribit quotes. The quotes below are based on 12/27, with the current Bitcoin price at $87,963 and an expiration date of 2026/1/30.
Covered Call (Covered Call)
Covered Call is a trading strategy that involves holding a physical commodity while simultaneously selling a call option, thereby increasing returns by collecting a premium.
If you hold physical shares and have your own opinion on the price, you can sell a call option at that price and receive a premium for committing to sell at that price. This is similar to charging a commission on a limit order.
Case Study: Suppose Bitcoin is currently priced at 87K, and you are willing to sell it for 95K.
- Sell one call option.
- Expiry date: 1/30
- Execution price: 95K
- Premium: US$1,572
- Expiry Date: Sell at 95K if Bitcoin price exceeds 95K.
- Expiration Date: Bitcoin price below 95K, net premium received.
This approach is similar to a dual-currency investment strategy offered by an exchange. However, the exchange uses your physical assets as collateral to provide you with a short-term option, while the exchange profits from the price difference. If possible, trading the option directly can yield even higher returns.
Vertical Credit Spread (Vertical Spread Seller Strategy)
Vertical credit spread is a strategy that simultaneously buys and sells credits with the same maturity date but different strike prices. It uses the option to buy to keep risk within an acceptable range.
Scenario 1: Bull Put Spread
Suitable timing: When you believe that BTC has fallen too far, and although it may not necessarily rise sharply, it should not fall below a certain support level .
- BTC Price Background: In October 2025, BTC reached a high of 126K, followed by a correction. Currently, the price is fluctuating around 87K, indicating strong support in the 80K-85K range.
- Operation method: Sell one unit of 85K Put (receive premium of 2,884) + buy one unit of 80K Put (pay premium of 1,485). Net income of $1,399.
- Mindset: As long as BTC stays above 85K at expiration, I can collect the premium.
- Maximum gain, Bitcoin remains above 85K: $1,399.
- Maximum loss, when Bitcoin falls below 80K: (85K-80K)-1,399=3,601 USD
Scenario 2: Bear Call Spread
Suitable timing: BTC momentum has dried up, and it is unlikely to rise back to a specific high in the short term .
- BTC Price Movement Background: Market sentiment was relatively weak at the end of 2025, with funds flowing into physical gold (gold prices surged by 70%). Bitcoin repeatedly attempted to return to the 100K mark without success, and currently faces significant resistance above.
- Operation method: Sell one unit of 95K Call (receive premium of $1,573) + buy one unit of 100K Call (pay premium of $784). Net income: $789.
- Mindset: "Although Bitcoin is digital gold, it has performed poorly this year, and I bet it won't rise to more than 95,000 by the end of the year."
- Advantages: Even if BTC rebounds slightly, as long as it doesn't rise above 95K, you can still collect all the premiums.
- Maximum gain, Bitcoin remains below 95K: $789.
- Maximum loss, when Bitcoin rises above 100K: (100K-95K)-789=4,211 USD
Sell Put (Selling Put Options)
If you are bullish, you can sell put options, which effectively allows you to bear downside risk at a predetermined price.
Case Study: Assuming Bitcoin's current price is 87K, do you believe it will not fall below 75K before the end of January?
- Sell one put option.
- Expiry date: 1/30
- Execution price: 75K
- Royalty: US$743
- Expiration Date: Bitcoin price exceeds 75K, net premium received.
- Expiry Date: If the price of Bitcoin is below 75K, you must buy Bitcoin at a price of 75K.
This is often seen in traditional finance as a way to "buy low and collect rent." This strategy performs well in range-bound, slightly bullish markets. It performs worst during sharp declines driven by fear and panic. The biggest risk lies in a "black swan" event causing prices to halve; although premiums are received, the paper losses could be enormous (with no lower limit to losses until the price reaches zero). Therefore, margin management is crucial to ensure the ability to withstand losses in extreme market conditions.
The biggest advantage of using options is that they are leveraged derivatives. This means you don't actually need to own 1 Bitcoin to execute the trades mentioned above. This amplifies the premium received in the examples, which is why the book advocates using selling options as a source of profit. Because with minimal capital and proper risk management, setting the strike price far from the market price maximizes your chances of winning. However, options are leveraged trading, and in the face of market volatility, without proper risk management, you can easily suffer huge losses. There's no such thing as a free lunch; to maximize your profits, you must be well-prepared.
This article, "The End of Crypto Yields: How to Create a Stable Source of Income by Selling Options," first appeared on ABMedia, a ABMedia .
