Analysis: Institutional investors increasingly turning to altcoin options

Institutional investors are increasingly extending options strategies, once primarily used for Bitcoin, to the altcoin market to manage price volatility and generate additional returns, CoinDesk reported, citing crypto derivatives trading firm STS Digital. The firm explained that institutions are now applying various strategies to altcoins, such as covered calls, which involve buying an asset while selling a corresponding call option. Other tactics include selling put options to bet against sharp downturns, hedging downside risk, and buying call options to prepare for a potential rally. According to STS Digital, investors are adopting these strategies to control their exposure while minimizing the risk of forced liquidations, such as the event that triggered a price crash on Oct. 10.