On July 7, 2023, I rolled forward two covered call positions on Bitcoin and Ethereum, using perpetual futures as collateral.
Originally I established these trades on July 3, 2023, buying 0.1 BTC futures at $30,809 and 1 ETH futures at $1,952 and selling call positions with July 7th expiry at $31,000 and $1,950, respectively.
As none of the call positions expired in the money, I just rolled to the next week's (July 14) expiry for both positions:
The total premium received so far from selling call options.
- BTC = 0.00265 (0.00155+0.0011)
- ETH = 0.026 (0.019+0.007)
What happens next:
BTC
On the expiry date, July 14, 2023, BTC is trading under $31,000 per coin - options expire worthless and I keep premium - if BTC trades above $31,000 I must pay the difference between spot and strike price.
Say BTC expires at $32,000. I would need to pay a difference of $1,000 in crypto itself (1000/31000) or about 0.0322 BTC.
But as I additionally have a perpetual future established at $30,800 I will gain from this future contract $1,200 or converted to crypto 0.0387 BTC
Of course, I should manually close the futures position at the time of expiry.
In case this call position will get assigned at $32,000 I will earn
0.00155+0.0011-0.0322+0.0387 = 0.00915 BTC / 292.8 USD
Break-even: $30,013
ETH
On the expiry date, July 14, 2023, ETH is trading under $1,950 per coin - options expire worthless and I keep premium - if ETH trades above $1,950 I must pay the difference between spot and strike price.
Say ETH expires at $2,100. I would need to pay a difference of $150 in crypto itself (150/1950) or about 0.076 ETH.
But as I additionally have a perpetual future established at $1,952 I will gain from this future contract $148 or converted to crypto 0.075 ETH
Of course, I should manually close the futures position at the time of expiry.
In case this call position will get assigned at $2,100 I will earn
0.019+0.007-0.076+0.075 = 0.025 ETH / 52.5 USD
Break-even: $1,904.39
Total potential income: $345.3
In case I will close these positions this Friday with a profit, I will reinvest the profit into NKE stock!
