Established 2 Covered Calls on Ethereum using Perpetual Future contracts - potential return of 13.73% in 1 day
Tonight (Tbilisi) time, I suddenly woke up at 4:30 AM to test my idea to write call options on crypto using futures as a covered call.
The idea is simple - instead of buying Crypto at the open market and then selling call options on the Deribit trading platform - how about buying Ethereum perpetual future and then selling call options?
This is not trading advice. Investments in stocks, funds, bonds, or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset
Here is the trade setup I come up with:
BOT 2 ETH-PERPETUAL 1803.5 USD
SLD 2 ETH MAY 20 '23 1825 Call Option 0.004 ETH
Perpetual futures are traded with 50x margin on the Deribit trading platform, and to control futures worth 2 ETH I was required just 1/50 in margin collateral, or to set up this trade it was enough with about 0.04 ETH / 72.28 USD + 0.2 ETH / 361.4 USD margin for 2 call options.
Total investment: 433.68 USD
What happens next?