Cryptocurrency Options Platform Derive CEO Nick Forster authored an article titled “Yield Maggedon,” stating that the era of easily achieving 20-30% annualized returns in the crypto world has come to an end, and advocating the use of options as a transparent and clearly risked source of income. Selling options has long been an effective way to generate scaled returns in traditional finance, and it is also a method used by casinos and insurance companies to profit through probabilistic strategies. This article will introduce several strategies for selling options to create a stable income stream.
Crypto Yield Maggedon Is Here, The Era of Easy Money Is Over
Nick believes that the era of easy money in the cryptocurrency space has ended—the yield maggedon has arrived. You can no longer obtain near-risk-free returns of over 30% through methods like airdrops or basis trading.
Many protocols and products aimed at delta-neutral, high-yield trading now struggle to maintain user bases and revenue under harsher conditions.
Currently, mainstream DeFi APYs are only around 4.5%, close to the near-risk-free US Treasury yields in traditional finance, which no longer seem attractive.
Selling Options: A New Stable Income Source in Crypto
Nick advocates using options as a transparent and clearly risked source of income. He was previously a stock options trader at Susquehanna and is now the co-founder of Derive (, a decentralized options platform for Bitcoin and Ethereum, formerly known as Lyra ).
For decades, selling options has been an effective way to achieve scaled returns in traditional finance, and it is a tool used by most institutional investors for the following reasons:
- Ability to decide the specific risks and corresponding returns you want to take
- Clear and transparent risk profile
- Collateral can be used to generate income
The Profit Strategy of Casinos and Insurance Companies: Selling Options
Nick’s idea aligns with the recent book “The Complete Guide for Option Sellers: Building Stable Income Strategies from Basic to Advanced,” which emphasizes that casinos and insurance companies profit by using probabilistic strategies—selling options. Statistics show that 80% of options expire worthless, which could be due to investors choosing to exit early, but it also suggests that sellers are often the market winners. Otherwise, why would institutions like insurance companies exist?
A key point is: time favors the seller because options have “time value.” As expiration approaches, this time value gradually erodes until it reaches zero at expiration. This means that if the market remains sideways (no significant rise or fall), the value of options held by buyers diminishes, allowing sellers to profit from the premiums. This is why, statistically, most options expire worthless, making sellers long-term winners.
Common Options Selling Strategies
Below are some common options strategies selected by the author, all based on Bitcoin, with Deribit quotes as reference. The quotes are as of 12/27, with Bitcoin at $87,963, expiring on 2026/1/30.
Covered Call
A covered call is a strategy where you hold the underlying asset and sell call options (, increasing income through premiums ).
If you hold the underlying and have a view on the price, you can sell call options ( at your target price, collecting premiums for the right to sell at that price. It’s similar to placing a limit order with a fee.
Example: Suppose Bitcoin is at $87K, and you are willing to sell at $95K
Sell one call )call option(
Expiration: 1/30
Strike Price: $95K
Premium: $1,572
If Bitcoin exceeds $95K at expiration, you sell at $95K
If Bitcoin is below $95K at expiration, you keep the premium
This is similar to a dual-currency financial product on an exchange, where the exchange collateralizes your holdings and sells you a short-term option, earning a significant spread. Directly trading options can yield even higher returns.
Vertical Credit Spread
A vertical credit spread )vertical spread seller strategy( involves simultaneously buying and selling options with the same expiration date but different strike prices. The purchased option helps control risk within an acceptable range.
Scenario 1: Bull Put Spread )Bull Put Spread(
Suitable when: You believe BTC has fallen deep, and while it may not surge, it shouldn’t break a certain support level.
BTC trend background: In October 2025, BTC hit a high of $126K, then corrected. Currently, the price oscillates around $87K, indicating strong support between $80K and $85K.
Operation: Sell one unit of $85K put (collects $2,884 premium) + buy one unit of $80K put (pays $1,485 premium). Net income: $1,399.
Mindset: As long as BTC stays above $85K at expiration, I keep the premium.
Maximum profit: $1,399 if BTC remains above $85K.
Maximum loss: When BTC drops below $80K, $85K - $80K - $1,399 = $3,601.
Scenario 2: Bear Call Spread )Bear Call Spread(
Suitable when: BTC momentum has waned, and it’s unlikely to rally back to a certain high in the short term.
BTC trend background: Market sentiment at the end of 2025 is subdued, with capital flowing into physical gold (gold prices surged 70%). BTC has repeatedly failed to reach $100K, with heavy resistance above.
Operation: Sell one unit of $95K call (collects $1,573) + buy one unit of $100K call (pays $784). Net income: $789.
Mindset: “Although Bitcoin is digital gold, it has been weak this year. I bet it won’t surpass $95K by year-end.”
Advantages: Even if BTC slightly rebounds, as long as it doesn’t exceed $95K, you keep the entire premium.
Maximum profit: $789 if BTC stays below $95K.
Maximum loss: When BTC exceeds $100K, $100K - $95K - $789 = $4,211.
Sell Put
If you prefer bullish strategies, you can sell puts, which effectively means accepting downside risk at a predetermined price.
Example: Suppose Bitcoin is at $87K, and you believe it won’t fall below $75K before the end of January.
Sell one put )put option(
Expiration: 1/30
Strike Price: $75K
Premium: $743
If Bitcoin exceeds $75K at expiration, you keep the premium
If Bitcoin falls below $75K at expiration, you must buy Bitcoin at $75K
This is often seen in traditional finance as “rent collection on low-cost stocks.” It performs well in sideways or slightly bullish markets but poorly during sharp declines driven by fear and panic. The biggest risk is a “black swan” event causing a 50% or more drop, resulting in significant paper losses (unlimited loss potential until the price hits zero). Proper margin management is crucial to withstand extreme market conditions.
The main advantage of using options is leverage: you don’t need to own a full Bitcoin to execute these trades. The premiums collected are amplified, which is why many advocate selling options as a source of income—using minimal capital to effectively control risk by setting strike prices far from the current market. However, options are leveraged instruments, and without proper risk management, market volatility can lead to substantial losses. Preparation is essential to maximize profits and mitigate risks.
This article “Yield Maggedon Is Here: How to Create Stable Income by Selling Options” first appeared on Chain News ABMedia.
