Crypto options are contracts that give the buyer the right — and the seller the obligation — to buy or sell crypto at a set price by a set time. You can buy them to bet on a price move, or sell them to collect premium up front. Overcast is built for the second path: earning a premium with covered calls and cash-secured puts, priced by professional trading desks and settled onchain.
Below: how the instrument works, how onchain settlement differs from centralized exchanges, and when selling options fits. Educational only — not a performance promise.
Key takeaways
- A crypto option gives the buyer a right and the seller an obligation at a set strike until a set expiry. The buyer pays the premium up front.
- Selling options (covered calls, cash-secured puts) earns that premium in exchange for capped upside or an obligation to buy. It does not remove downside.
- Platforms differ on three things: who holds your funds, how the premium is set (order book, vault, AMM or RFQ) and how the option settles.
- The same two trades work on tokenized stocks, where they are not bound to the 100-share contract of listed equity options.
What crypto options are
An option has five core terms:
- Underlying — the asset: a tokenized stock such as NVDA or TSLA, BTC, ETH, SOL, or another tokenized real-world asset (RWA).
- Strike — the exchange price if the option is exercised.
- Expiry — when the exercise window closes.
- Premium — what the buyer pays the seller up front for that right.
- Assignment — what happens when the buyer uses the option: the seller has to deliver on it.
Selling an option is also called writing it.
Calls and puts
| Type | Buyer | Seller |
|---|---|---|
| Call | Right to buy the asset at the strike | Obligation to sell if exercised |
| Put | Right to sell the asset at the strike | Obligation to buy if exercised |
A covered call is a call you sell while holding the asset as collateral. A cash-secured put is a put you sell while posting stablecoins (or cash-like collateral) sufficient to buy if assigned.
On Overcast, both work the same way: the seller locks collateral, and the buyer pays a premium for the right to trade against it until expiry.
European-style exercise
Most crypto options — onchain protocols and many listed platforms — are European-style: exercise only in a defined window at or near expiry, not any day (American-style). That makes the outcome predictable.
Buying vs selling options
| Buy options | Sell (write) options | |
|---|---|---|
| Cash flow | Pay premium | Collect premium up front |
| Typical goal | Betting on a move, or protection | Income on assets or stablecoins you hold |
| Main risk | Premium can expire worthless | Assignment and opportunity cost; collateral at stake |
If you want yield from crypto options, start with selling, not buying calls for leverage. Listed markets have forty years of data on this trade-off. In a study of the Cboe BXM covered-call index covering June 1986 to January 2012, the index delivered a similar annualized return to the S&P 500 with lower volatility, and it lagged when the market rose sharply. Premium income is a trade-off, not free yield.
What drives the premium
Three inputs set most of an option's price:
| Input | When it is higher | Why |
|---|---|---|
| Implied volatility | Premium rises | The market expects larger moves, so the right to buy or sell is worth more |
| Time to expiry | Premium rises | There is more time for the price to reach the strike |
| Distance of the strike from the current price | Premium falls | A strike far from the current price is less likely to be reached |
Volatility is why premiums differ so much between assets. On 6 October 2026 the Volmex 30-day implied volatility indices stood at about 56 for bitcoin and 71 for ether, against roughly 15% annualized volatility for the S&P 500 since 2007 (Cboe). A seller is paid more on a volatile asset because assignment is more likely, not because the trade is better.
Onchain vs offchain platforms
Crypto options live in two broad platform types. Both can be legitimate; the trade-offs differ.
Centralized exchanges
Order-book exchanges list standardized contracts. You get busy markets and a familiar trading screen — and you take custody and counterparty risk with the exchange. Margin, liquidations, and exercise rules are specific to each platform. Examples: Deribit, OKX, Bybit and Binance. Deribit was the largest by volume and open interest, with about $60 billion of open interest, when Coinbase completed its acquisition in August 2025.
Onchain protocols
Onchain protocols settle through smart contracts, with the collateral held in escrow. Common patterns:
- Order books — orders are matched offchain and settled onchain. Examples: Derive, Aevo.
- Vault / structured products — deposit into a strategy that sells options on a schedule. Example: Thetanuts Finance; Ribbon Finance was the largest of the first wave.
- Automated market makers (AMMs) — a pool of funds that sets prices by formula, so a price is always available. Example: Panoptic.
- RFQ (request-for-quote) — you state your terms; trading desks quote a premium; you accept one; settlement finalizes onchain. Examples: Rysk, Overcast.
The DefiLlama onchain options dashboard tracks volume and open interest across these platforms.
Overcast uses the RFQ path: the price is agreed by quote, and the trade settles onchain. There is no order book, and no exchange holds your assets. They sit in escrow under the option's rules.
The first wave of onchain options (roughly 2020–22) grew fast on vaults and incentives, then lost most locked capital in the bear market — too few buyers and sellers spread across too many contracts, and too little reward for the firms quoting prices. Ribbon Finance, the largest vault protocol, held about $268 million in March 2022 and about $51 million a year later. Newer designs lean toward order books, RFQ, and professional quoting. Activity is higher than that first trough, but still small next to centralized crypto options platforms.
Settlement in plain terms
Settlement answers one question: what changes hands when the buyer uses the option?
- Delivery — the buyer pays the full strike amount and receives the asset. Simple, but the buyer needs the whole amount in cash.
- Cash-style — the buyer receives only the profit, paid out of the collateral. Easier for the buyer, but it needs a trusted price at that moment.
- Delivery with a price check — as with delivery, but only allowed when a price feed confirms the option is worth using.
The difference is how much cash the buyer needs. Take calls on 350 shares, with the share at $220 and a strike of $200: the option is worth about $7,000 to the buyer. With delivery, the buyer must find about $70,000 to pay for the shares. With cash-style settlement, the buyer needs only the premium and receives the $7,000 out of the collateral. That is not a discount. It swaps a need for cash for a reliance on price data.
Overcast supports these methods. The technical detail is in the settlement methods docs.
When selling options fits
Writing options fits when you already have a view on the asset and accept the assignment profile.
Covered calls on crypto you hold
You hold BTC, ETH, SOL or another supported asset and are willing to sell upside above a strike for premium now. If the price finishes below the strike, you keep the asset and the premium. If it finishes above and the call is exercised, you deliver or settle per the contract.
Cash-secured puts while waiting to buy
You want to buy an asset below today’s price, or earn premium on stablecoins meanwhile. Selling a put at your target strike posts stable collateral; you collect premium. If assigned, you buy at the strike; if not, you keep the premium.
The same trades on tokenized stocks
A listed US equity option controls 100 shares, so a covered call on a $400 stock means holding $40,000 of it first. Tokenized shares are divisible and a quote-driven market needs no fixed contract size, so the same covered call or cash-secured put can be written on the number of shares you actually hold. The mechanics and the extra risks are in Tokenized stock options.
Why RFQ instead of a book
Sellers care about a fair premium and a clear outcome more than about prices that update every second. With a request for quote, trading desks compete on your exact amount, strike and expiry, and the trade then settles onchain.
The step-by-step walkthrough is How to sell a covered call on Overcast, and developers will find the technical flow in the docs. For the pricing model itself, see RFQ vs order book.
Choosing a platform
Compare platforms on how they settle, what collateral they need, which assets they cover, their fees, how the premium is set (order book, vault or RFQ), and who holds your funds. A criteria-led comparison: Crypto options platforms compared.
FAQ
What are the four terms that define a contract?
You agree a strike, an expiry and an asset. The buyer pays a premium for the right to buy (call) or sell (put) at that strike. The seller collects the premium and posts collateral. At expiry, the option is exercised or expires according to the contract’s settlement rules — on a platform account or via onchain escrow.
Where do people actually trade them?
Centralized derivatives exchanges list crypto options, and onchain protocols let you buy or sell with onchain settlement. Availability depends on asset, platform, and jurisdiction. Selling covered calls and cash-secured puts is how many holders turn their holdings or stablecoins into premium income.
Beyond BTC and ETH, what underlyings show up?
ETH and BTC are the most common, followed by other large coins such as SOL. Onchain platforms increasingly support stablecoins and, in some designs, tokenized stocks and other RWAs. Quote-driven markets are the most flexible here: if a counterparty will price it, it can be written, so coverage is not limited to a fixed list of listed contracts. Always check the collateral and settlement asset pair for the market you use.
Exchange custody vs onchain escrow — what changes?
On a centralized exchange, options trade on an order book, the exchange holds your funds, and its margin rules apply. Onchain options settle through smart contracts, with the collateral held in escrow; the price may come from a vault, an AMM or an RFQ. Overcast sets the price by request for quote and settles the trade onchain.
Sources
- The CBOE S&P 500 BuyWrite Index (BXM): A Review of Performance, Hewitt EnnisKnupp for Cboe, 2012
- Volmex implied volatility indices, Volmex, viewed 6 October 2026
- Cboe S&P 500 PutWrite Index (PUT) factsheet, Cboe Global Indices, 31 August 2026
- Deribit Joins Coinbase, Coinbase press release, 14 August 2025
- Primer: Equity (stock and ETF) Options, The Options Clearing Corporation
- Onchain options dashboard, DefiLlama (community dashboard), viewed 6 October 2026
- Best DeFi Options Protocols in 2026, Derive
- The Vaultification of DeFi, The Mothership, 31 March 2022
- Ribbon Finance deep dive, Blockchain at Georgia Tech, 9 March 2023
Next reading
Risk disclosure and disclaimer
The content on this blog is published by Overcast for general information and education only. It does not constitute financial, investment, legal, tax or accounting advice, and it is not an offer, solicitation or recommendation to buy, sell or hold any asset or to use any product or strategy. It does not take into account your objectives, financial situation or needs. Consult a qualified professional before making any investment decision.
Writing options involves substantial risk. A covered call limits your upside and leaves you fully exposed to declines in the underlying asset. A cash-secured put can oblige you to buy an asset at a price above its market value at expiry. Premiums, yields and APRs shown are illustrative or historical, are not guaranteed and do not predict future results. Crypto assets and tokenized securities are highly volatile and may lose some or all of their value. Smart contracts may contain vulnerabilities, and onchain transactions are irreversible.
Products, assets and features mentioned may not be available in your jurisdiction. You are responsible for complying with the laws that apply to you. Information may be incomplete, contain errors or become outdated; Overcast makes no warranty as to its accuracy or completeness.
Overcast is in early access. Features, supported assets and availability described here may change before or after launch.
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