Institutions Increasingly Use Bitcoin Options Strategies in Altcoins, STS Digital Reports
Institutions are applying bitcoin options trading techniques to altcoins to manage price volatility and enhance returns, according to STS Digital, a regulated digital asset trading firm. Demand from venture capitalists, foundations, large token holders, and private entities is driving increased altcoin options trading.
The strategies adopted include selling covered calls on Bitcoin to collect premiums, selling puts, purchasing puts as downside protection, and buying calls for potential upside exposure. This shift towards altcoin options intensified after the October 10 market crash, which involved forced liquidations and auto-deleveraging that distributed losses across participants.
STS Digital serves as a principal dealer providing liquidity by quoting options, spot trades, and structured products across more than 400 cryptocurrencies. The firm settles billions in altcoin options volume annually through bilateral trades. While Deribit focuses on major derivatives for Ethereum (ETH), Ripple (XRP), and Solana (SOL), STS Digital offers a broader selection of altcoin options and anticipates continued growth in options linked to Bitcoin and other tokens alongside sustained institutional adoption.
Institutions, along with project founders holding large amounts of altcoins, are leveraging these options playbooks to manage risk exposure without incurring the risk of forced liquidations, further supporting the maturation of the altcoin options market.
