It will soon be possible to generate an income from holding bitcoin. Next month we will have futures. In 2018 options and ETFs will follow.
You can use options to generate an income. The risk is that you don’t know what you are doing and you come a cropper, (don’t get on a horse of you haven’t learned to ride).
This involves writing an out-of-the-money call.
You can limit the risk of losing your bitcoin with a buy-write strategy. For example, you could sell the January $ 10’000 call for say $800 and buy the March $11’000 call for $800. It’s a wash until January expires, but then you can sell a call for February to bring in $800 and then sell another one for March to bring in $800.
The actual numbers could be anything, depending on the underlying moves, but in the illustrated example above, your net profit would be $1600 over 3 months, or around 64% annualised.
Today the only way to generate an income is to join a mining pool. The risk is that you are in an unregulated area dealing with shadows.
Thanks for the reply! Will keep an eye on the evolution of options here. I sell a lot of put options in traditional stocks and indices - as credit spreads
I don’t like selling calls as it is betting against the long-term market trend and I don’t want to get called away, I want the options to expire worthless. Puts I have been doing for 4 years or so now and have always managed to roll out and/or down fairly easily when the underlying asset has dipped a bit too far
Not sure I would want to get into it with bitcoin - I guess the premiums would be huge, but would take some serious monitoring given the volatility.
Still, will be interesting to see how it evolves. Maybe it is as simple as buying and staking some coins - OKCash, Smartcash etc - I have a small amount of each and enjoy the volume appreciation as well as the price appreciation
Cheers