Grayscale says Bitcoin covered calls may deliver 22% yield

• Grayscale said Bitcoin (CRYPTO:BTC) covered call strategies could generate annual yields of up to 22% in a sideways market.
• The asset manager said the approach allows investors to earn income while holding Bitcoin.
• Returns depend on market conditions and may limit gains if Bitcoin rises sharply.

Grayscale said Bitcoin (CRYPTO:BTC) covered call strategies could generate annual yields of up to 22% when the cryptocurrency trades within a relatively narrow price range.

The asset manager said the strategy allows investors to collect option premiums while continuing to hold their Bitcoin.

Grayscale noted that covered calls tend to perform best in sideways or moderately rising markets where price volatility creates premium income without large upward moves.

A covered call strategy involves selling call options against Bitcoin holdings to generate additional income from option premiums.

The strategy can reduce overall returns if Bitcoin rallies sharply because the seller may have to deliver the asset at the agreed strike price.

Grayscale said covered calls may appeal to investors seeking regular income instead of relying solely on Bitcoin price appreciation.

The company added that investors should weigh the potential income against the risk of limiting gains during strong market rallies.