Using TRX Options to Hedge Spot and Earn Call Premium
Summary
The document explains basic call and put payoffs, then applies them to two strategies for TRX holders. Buying puts alongside spot can set a lower effective floor while retaining gains if TRX rises. Selling calls against spot collects premium and lowers the effective cost basis, but caps gains above the call strike. Its examples illustrate these tradeoffs with hypothetical position sizes, strikes, and premiums.
The article also notes that the options are USDC settled and each contract represents 10,000 TRX. These examples simplify option value to expiry and do not account for changes in implied volatility, early position adjustments, fees, or other practical trading factors. Premium income is compensation for accepting risk, not guaranteed yield; covered calls leave downside exposure and can forfeit gains above the strike. Strike and expiry choices depend on market views, option prices, and risk tolerance. The strategies are educational illustrations rather than a complete assessment of suitability or risk.
Key ideas
- Buying puts can limit losses below the strike while preserving participation in spot gains, after accounting for the premium.
- Selling calls against spot generates premium but limits gains above the strike.
- Option buyers risk the premium paid and choose whether to exercise, while the seller receives premium in exchange for obligations.
- TRX options are cash settled in USDC, and each contract represents 10,000 TRX.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.