Institutions are transplanting bitcoin’s options playbook onto altcoins as they hunt for yield and protection, according to STS Digital, a regulated principal trading firm focused on digital-asset derivatives.
“Our client base includes token projects and foundations, investors with large holdings, and asset management firms managing exposure ahead of liquidity events,” Maxime Seiler, co‑founder and CEO of STS Digital, told CoinDesk. “Increasingly, we’re also seeing these participants apply option strategies that were historically used in Bitcoin to the altcoin space.”
Why options? Options contracts give buyers the right — but not the obligation — to buy or sell an asset at a preset price by a future date. Calls are bullish (right to buy); puts are bearish (right to sell). Sellers of options collect an upfront premium, effectively writing insurance against price moves.
Institutions holding bitcoin have long used strategies such as covered calls — selling call options above the current market to earn premiums on top of spot holdings — as a steady income source since the market turmoil of 2020. They also sell puts to boost yield during rallies, buy puts as downside protection, or buy calls to participate in upside with limited risk.
Now, those same tactics are migrating to altcoins. Seiler said project founders, foundations, VCs and private holders are increasingly using covered calls, put selling for yield, downside hedges and call buying to manage exposure in tokens beyond bitcoin. The shift was reinforced by the Oct. 10 market event, when forced liquidations and auto‑deleveraging (ADL) on some exchanges led to losses even for profitable counterparties — a reminder of the risks of unmanaged leverage in illiquid markets.
“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. “It’s a clear example of why options are a more robust way to express risk in volatile markets.”
STS Digital positions itself to meet that growing demand. The firm quotes options, spot trades and structured products across more than 400 cryptocurrencies, acting as counterparty to institutional clients and providing liquidity and instant execution through bilateral trades. STS says it settles billions in altcoin options volume annually — an advantage at a time when centralized derivatives venues tend to concentrate on majors like ETH, XRP and SOL.
Looking ahead, Seiler expects adoption to keep rising. “We see strong and sustained institutional adoption continuing to drive demand for options as the preferred way to manage digital asset exposure,” he said. “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.”
The trend signals a maturation of altcoin markets: as liquidity and institutional involvement grow, sophisticated derivatives strategies that were once bitcoin‑centric are becoming part of broader risk‑management playbooks across the crypto ecosystem.
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