To sell a covered call on Overcast, you ask trading desks to quote a premium for your strike and expiry, and accept the quote you like. The premium is paid to you in the same transaction. At expiry you either get your asset back or you are paid the strike price for it.
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What is a covered call?
A covered call is a call option you sell while holding the asset as collateral. Buyers pay you a premium for the right to buy that asset at your strike by expiry. If the price finishes below the strike, you keep the asset and the premium; if it finishes above and the call is exercised, you sell (or settle) at the strike. Full primer: Crypto covered calls.
The trade in one example
You hold 10 tokenized AAPL shares at $330. You would be happy to sell them at $350, so you ask for quotes on a one-month call with a $350 strike.
Three trading desks answer with $3.50, $3.70 and $3.85 per share. You accept $3.85 and receive $38.50 straight away.
| AAPL at expiry | What happens | You end up with |
|---|---|---|
| Below $350 | The buyer does not use the option | Your 10 shares, plus the $38.50 |
| Above $350 | The buyer uses the option | $3,500 for your shares, plus the $38.50 |
In both cases the premium is yours. What you give up is any price above $350, and you still carry the full risk of the share falling.
A listed option would need 100 shares for this trade, about $33,000. Overcast has no minimum trade size at present, so 10 shares are enough if a desk quotes them.
What you need
- An early-access Overcast account.
- The asset you want to earn on: a tokenized stock, BTC, ETH or SOL.
- A strike price you would really be happy to sell at.
Four steps
1. Choose the asset and the trade. In the app, pick the asset you want to earn on, then choose a covered call.
2. Set the amount, strike and expiry. The strike is the price you would be content to sell at. The expiry is how long your asset stays committed. If you are unsure, Crypto covered calls explains how to choose both.
3. Request quotes. Trading desks reply with a premium for exactly your terms. Quotes are valid for a short time, so compare them while they are on screen. You do not have to accept any of them.
4. Accept one. Your asset is locked and the premium is paid to you in one transaction. There is no waiting for the other side to pay.
After expiry, come back and collect. If the buyer did not use the option, you get your asset back. If the buyer did, you receive the strike payment instead.
This walkthrough is for the Overcast web app. The same flow is also available programmatically — see the Overcast docs and getting started.
What you receive if the price ends above your strike
How an option settles is part of its terms, and you see it in the quote.
| Settlement | What the buyer does | What you receive |
|---|---|---|
| Delivery (the default) | Pays the full strike amount and takes the asset | $3,500 in the example |
| Delivery with a price check | The same, but only when a price feed confirms the price is above the strike | $3,500 in the example |
| Cash-style | Takes only the profit, paid out of your asset | What is left of your asset |
In the example with cash-style settlement and AAPL at $370, the buyer's profit is $200, which is about 0.54 of a share. You would keep the other 9.46 shares.
Before you accept
- The strike is a price you would really sell at.
- You can leave the asset locked until expiry.
- You are aware of all potential outcome scenarios.
- You have compared the quotes.
FAQ
When do I receive the premium?
When you accept a quote. Your asset is locked and the premium is paid in the same transaction.
Do I need 100 shares to sell a covered call on a tokenized stock?
No. There is no minimum trade size at present, so you can sell a call on the number of tokenized shares you hold, provided a desk quotes that size.
Can I get my asset back before expiry?
Not while the option is live. The asset stays locked until expiry, and you collect afterwards.
What if none of the quotes is good enough?
Accept none. The request expires, or you cancel it, and your deposit stays in your account.
Is this available to trading firms and through an API?
Yes. Desks, funds and developers can do the same thing in code. That is covered in the Overcast docs, starting with getting started.
Next reading
- Crypto covered calls — how to choose strike and expiry
- Tokenized stock options — what a tokenized stock adds to your risk
- How Overcast works
- Cash-secured puts — the matching trade for stablecoin holders
- RFQ vs order book
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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