Key Takeaways:
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Covered calls gained traction as cash-and-carry yields collapsed, but data shows they aren’t structurally dampening Bitcoin price.
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Stable put-to-call ratios and increasing put demand suggest hedging and yield strategies go hand in hand with bullish positioning.
As the value of Bitcoin (BTC) entered a downtrend in November, traders began to develop theories as to why institutional inflows and company accumulation didn’t sustain the value level above $110,000.
One commonly cited explanation is the increasing demand for Bitcoin options, particularly those tied to the BlackRock iShares Spot Bitcoin (IBIT) exchange-traded fund.
Open Interest for IBIT Options. Source: OptionCharts.io
Total open interest in Bitcoin options increased from $39 billion in December 2024 to $49 billion in December 2025, bringing the covered call strategy under greater scrutiny.
Critics argue that by “renting” their upside potential for a fee, large investors have inadvertently created a cap that stops Bitcoin from entering the following parabolic phase. To understand this argument, it's helpful to think about a covered call as a trade-off between price appreciation and regular income.
In a covered call strategy, an investor who already owns Bitcoin sells a call (buy) option to a different party. This gives the client the suitable to buy that Bitcoin at a set price, say $100,000, by a particular date. In return, the vendor receives an upfront money payment, just like interest on a bond.
This options strategy differs from fixed income products in that the vendor continues to carry a volatile asset even when its potential upside is restricted. If Bitcoin rises to $120,000, the vendor can have to sell for $100,000, effectively missing out on the extra profits.
Traders argue that this dynamic suppresses price motion because skilled traders who purchase these options often sell Bitcoin on the spot market to hedge their risk, making a persistent “sell wall” around popular strike prices.
The options-based return replaced the collapsed cash-and-carry trade
This shift to options-based returns is a direct response to the collapse of cash-and-carry trading, which involves selling BTC futures while holding a corresponding position within the spot market.
Annualized premium for BTC 2-month futures. Source: laevitas.ch
For much of late 2024, dealers earned a consistent 10% to fifteen% markup. However, by February 2025, this premium had fallen below 10%, and in November it struggled to remain above 5%.
In search of upper returns, funds moved into covered calls, which offered more attractive annual returns of 12% to 18%. This transition will be clearly seen in IBIT options, where open interest increased from $12 billion to $40 billion at the tip of 2024. Nevertheless, the put-to-call ratio has remained stable below 60%.
Put-to-call ratio of IBIT options. Source: OptionCharts.io
If widespread “suppressive” call selling were truly the dominant force, this relationship would likely have collapsed because the market became saturated with call sellers. Instead, the balance sheet implies that for each yield-focused seller, there remains to be a buyer positioning for a breakout.
The put-to-call ratio suggests that some participants sell upside call options, but a much larger group buys put (sell) instruments to guard themselves from a possible price decline.
The recent defensive stance is reflected within the skew metric. While IBIT put options traded at a 2% discount at the tip of 2024, they now trade at a 5% premium. At the identical time, implied volatility, the market's measure of expected turbulence, fell to 45% or less as of May, in comparison with 57% at the tip of 2024.
BTC options implied volatility. Source: laevitas.ch
Lower volatility reduces the premiums earned by sellers, meaning that the motivation to make use of this so-called “suppressive” strategy has actually turn into weaker, though total open interest has increased.
The argument that covered calls keep prices low makes little sense when the sellers of those call options stand to realize probably the most when prices rise toward their goal levels. Instead of acting as a constraint, the choices market has turn into the first place where Bitcoin's volatility is monetized to generate returns.
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