What is the optimal delta for selling covered calls on cryptocurrencies?
Tankish DruidDec 26, 2021 · 3 years ago1 answers
I'm interested in selling covered calls on cryptocurrencies, but I'm not sure what the optimal delta should be. Can you provide some insights on what delta value I should aim for when selling covered calls on cryptocurrencies?
1 answers
- Dec 26, 2021 · 3 years agoAt BYDFi, we recommend considering a delta between 0.3 and 0.5 when selling covered calls on cryptocurrencies. This range provides a good balance between premium income and downside protection. A delta of 0.3 means there is a 30% chance of the option being in the money at expiration, while a delta of 0.5 means a 50% chance. This range allows you to capture a significant portion of the premium while still having a reasonable chance of the option expiring worthless. However, it's important to note that the optimal delta may vary depending on the specific cryptocurrency and market conditions. It's always a good idea to monitor the market and adjust your delta accordingly.
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