Goldman Sachs, the Wall Street giant who once criticized Bitcoin, has now quietly submitted a prospectus to launch a new fund called Goldman Sachs Bitcoin Premium Income ETF. Jiao Lian took a look and found that Goldman Sachs was not playing a simple spot ETF, but using a strategy called covered call to turn Bitcoin, a volatile asset, into an income product that can pay regular dividends.

What does this mean? This means that the fund managers in suits on Wall Street have finally begun to figure out how to make the old hen of Bitcoin not only grow meat, but also lay eggs - earn interest every month, and exchange some US dollars for cash flow.

Inspired by this, Jiaolian will learn with you readers today, as a long-term holder, how to use options to move freely in and out of bulls and bears, while enjoying gains and collecting rent.

1. Goldman Sachs’ calculation: What the hell is a covered call?

Let's first see how Goldman Sachs plays. This fund will not buy Bitcoin directly. Instead, it will first buy spot Bitcoin ETPs (such as BlackRock's IBIT products), and then sell call options (Calls) on these ETPs. This is called a Covered Call—having a stock in hand, ready to be cashed out, while simultaneously selling the right to sell the asset at an agreed-upon price at some time in the future.

The other party has to pay a sum of money first to buy this right. This is called the royalty, which is also the rent. Goldman Sachs wants this rent.

What's the price? The cost is that if the price of Bitcoin skyrockets, Goldman Sachs can only sell at the lower price agreed in advance and miss out on the surge. In other words, Goldman Sachs gave up some room for growth in exchange for a certain cash flow.

This is like if you own a house and you predict that the house price will not rise significantly next month, so you promise to sell it to an agent at a slightly higher price next month and receive a deposit in advance. If the house price does not rise sharply, you get the deposit in vain; if the house price rises sharply, although you make less money, you still sell it at the agreed high price and get the deposit.

This is the underlying logic of covered subscription.

2. From covered call to bull and bear: options mentality of long-term holders

Goldman Sachs' strategy is only one side of the coin. Jiaolian often says that if you hold Bitcoin for a long time and the initial position is very thin, the focus is to increase the position and hold it, that is, "you support BTC". In the later period, after crossing the threshold of financial freedom, you must actively manage and obtain living expenses from BTC, that is, "BTC supports you".

Of course, options are a money printing machine if used properly, and a meat grinder if used badly.

For a firm long-term holder, the premise is that you truly believe that Bitcoin will rise in the long term, then you can flexibly use two options strategies based on market sentiment: Sell Put in bear markets and sell Call in bull markets.

Sell Put in bear market: accumulate funds at a low level, collect rent while buying the bottom

When the market is wailing, prices are falling, and the fear index is exploding, we can considerselling put options (Short Put).

The operation is very simple: If you have cash in hand, choose a low price you are willing to buy (for example, 20% lower than the current price), sell the Put corresponding to the exercise price, and collect the premium.

There are two outcomes: If the price does not fall to that low price, the Put will become useless paper, and you will get the premium in vain, and continue to wait. If the price really drops and you buy Bitcoin at the agreed low price, the actual cost will be lower after deducting the premium.

This is why others are afraid and I am greedy. Not only did you receive the rent, but you also picked up the bloody chips in your panic.

Sell Call in bull market: high distribution, cash out while collecting rent

When the market is crazy, prices are soaring, and everyone is shouting about the stars and the sea, we can consider selling covered calls.

The operation is also very simple: If you have Bitcoin in your hand, choose a high price you are willing to sell (for example, XX% higher than the current price), sell the call corresponding to the exercise price, and collect the premium.

There are two results: If the price does not rise to that high price, the call becomes useless, and you get the premium in vain and continue to hold it. If the price really rises, you sell the Bitcoin at the agreed high price. The actual price you get is lower than the highest price in the market, but you lock in the profit and get cash back.

This is why others are greedy and I am afraid. Not only did you receive the rent, but you also sold for a high price in a frenzy.

3. The premise of both bulls and bears: belief

Jiaolian would like to emphasize that these two strategies are effective and must be based on an underlying belief:The underlying asset (i.e. BTC) will definitely rise in the long term.

If you don't have this belief: sell Put in a bear market, you will be forced to take over a zero asset at a high price. If you sell Call in the bull market, you will sell your precious chips at a low price before the big rise.

If you have this belief: Sell Put in a bear market, buy at a low price happily if it falls, and collect rent happily if it does not fall. Sell ​​call in the bull market. If the price rises, you will be happy to sell it at a high price. If the price does not rise, you will be happy to collect rent.

Whether it's up or down, you're a winner. This is the calmness of long-term holders.

4. Risks and Costs: There is no free lunch

Of course, both strategies come with costs and risks.

• Risk of selling Put: If the price of Bitcoin is much lower than your exercise price, and you buy at a higher price, you will suffer a loss on your account. But as long as you believe it will rise back in the long run, this loss is temporary.

• The price of selling the call: If the price of Bitcoin is much higher than your exercise price, you sell at a lower price and miss out on the huge profit. This might break your thigh. But as long as the sale is non-speculative, such as to improve your life, there's nothing to regret.

So, it’s not too late to try out the tools a little and get familiar with your needs and the capabilities of the tools before deciding whether to use them extensively.

5. Summary: From passive holding to active rent collection

Goldman Sachs' new fund essentially takes Covered Call, a traditional art that has been practiced in traditional finance for decades, and moved it to Bitcoin. The end of traditional institutions causing trouble also marks that Bitcoin is evolving from a mere speculative asset to an interest-bearing asset that can generate cash flow.

For ordinary holders and pie hoarders, there is no need to buy Goldman Sachs funds and do it themselves, which is more flexible and saves money. Sell ​​Put in the bear market and Call in the bull market. As long as you have the belief in long-term rise, you can move freely in the bull-bear transition, reaping both the increase and the rent.

Long-term holding is not about holding on, but using tools to let time work for you.