Institutions are applying bitcoin’s options playbook to altcoins, driven by demand to manage risk and generate yield, STS Digital tells CoinDesk.
Maxime Seiler, co-founder and CEO of STS Digital — a regulated principal trader in digital-asset derivatives — said the firm’s clients include token projects and foundations, large holders, asset managers preparing for liquidity events, venture firms and private investors. “Increasingly, we’re also seeing these participants apply option strategies that were historically used in Bitcoin to the altcoin space,” Seiler said.
Why options are spreading beyond BTC
Options are contracts that give buyers the right, but not the obligation, to buy (call) or sell (put) an asset at a set price by a future date. For sellers, options are effectively insurance: they collect an upfront premium in exchange for taking on directional risk. Historically, institutional bitcoin holders have monetized their spot positions by selling calls above market (covered calls) or by selling puts to collect premium during rallies. They’ve also used bought puts as downside protection and bought calls to participate in upside with defined risk.
After the Oct. 10 auto-deleveraging (ADL) event — when exchanges forcibly closed positions and socialized losses — institutions have moved to option-based hedging across altcoins to manage exposure without the same forced-liquidation risks. “Beyond covered calls, institutions are actively using put selling for yield, downside hedging, and call buying to gain upside with defined risk. These strategies are increasingly being applied to altcoins as investors look to manage exposure without taking forced liquidations risk (ADL) that drove the October 10 crash,” Seiler said. He added that options offer a “more robust way to express risk in volatile markets.”
How STS Digital is meeting demand
STS Digital provides liquidity as a principal dealer, quoting options, spot trades and structured products across more than 400 cryptocurrencies. Unlike centralized derivatives venues that concentrate on major tokens such as ETH, XRP and SOL, STS says it can cater to rising demand for altcoin options through bilateral (OTC) trades in which STS takes the opposite side and offers instant execution. The firm settles billions in altcoin options volume annually, according to Seiler.
Outlook
Seiler expects institutional adoption of options tied to bitcoin and other tokens to continue growing. “Looking ahead, we see strong and sustained institutional adoption continuing to drive demand for options as the preferred way to manage digital asset exposure. With adoption having accelerated relentlessly over the past year, periods of consolidation and low volatility are increasingly viewed as attractive entry points ahead of the next wave of market catalysts,” he said.
Bottom line: The tools that once belonged primarily to bitcoin traders — covered calls, put selling, and directional option buys — are being adapted across the crypto market as institutions and large token holders seek yield and safer ways to hedge volatile altcoin positions.
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