Written by: Liu Jiao Lian
Goldman Sachs, the Wall Street giant that once criticized Bitcoin, has quietly submitted a prospectus to launch a new fund called Goldman Sachs Bitcoin Premium Income ETF [1]. Jiao Lian took a look and found that Goldman Sachs is not simply playing with a spot ETF but is using a strategy called Covered Call to turn Bitcoin, this volatile asset, into a revenue product that can pay dividends regularly.
What does this mean? It means that those suited fund managers on Wall Street have finally started to ponder how to make Bitcoin not only grow in value but also lay eggs—generate income every month, convert it into cash flow in US dollars.
Inspired by this, Jiao Lian today will learn with readers how, as a long-term holder, to use options to maneuver smoothly through bull and bear markets, capturing both price appreciation and rental income.
1. Goldman Sachs' Calculation: What is a Covered Call?
Let's see how Goldman Sachs plays this. This fund will not directly buy Bitcoin but will first purchase spot Bitcoin ETPs (like BlackRock’s IBIT product) and then sell call options on these ETPs. This is called a Covered Call—having the underlying asset ready while selling the right to sell the asset at a predetermined price at some point in the future.
The other party buying this right must first pay a fee, called the premium, which is essentially rent. What Goldman Sachs wants is this rent.
What’s the cost? The cost is that if the price of Bitcoin soars, Goldman can only sell at the previously agreed lower price, missing out on the huge gains. In other words, Goldman exchanges some upside potential for a guaranteed cash flow.
It's like you have a house, and you predict that the house price won't surge next month, so you promise to sell it to an agent at a slightly higher price and receive a deposit for it. If the price doesn’t surge, you pocket the deposit; if the price shoots up, you'll still sell at the agreed higher price but gained the deposit.
This is the underlying logic of covered calls.
2. From Covered Calls to Dual Benefits in Bull and Bear Markets: The Option Strategies for Long-Term Holders
Goldman Sachs's strategy is just one side of the coin. Jiao Lian often says that for long-term Bitcoin holders, especially when the initial position is small, the focus is on accumulating and holding, which means “you raise BTC,” and after crossing the financial freedom threshold, one must actively manage to derive livelihood from BTC, turning into “BTC supports you.”
Of course, if used correctly, options can be a money machine; if used poorly, they can be a meat grinder.
For a steadfast long-term holder, the premise is that you genuinely believe Bitcoin will rise in the long term, allowing you to flexibly apply two options strategies based on market sentiment: selling puts in bear markets and selling calls in bull markets.
Selling Puts in Bear Markets: Bottom Fishing While Collecting Rent
When the market is in despair, prices continue to fall, and fear indices are off the charts, we can consider selling put options (Short Put).
The operation is straightforward: you have cash on hand, select a price at which you are willing to buy (e.g., 20% lower than the current price), sell put options at the corresponding strike price, and collect the premium.
There are two outcomes: if the price does not drop to that low price, the put becomes worthless, and you get to keep the premium while waiting. If the price truly drops, you buy Bitcoin at the agreed lower price, and your actual cost is lower due to the deducted premium.
This illustrates being greedy when others are fearful. You not only receive rental income but also pick up distressed assets amid panic.
Selling Calls in Bull Markets: Distributing High Prices While Collecting Rent
When the market is euphoric, prices skyrocket, and everyone is shouting for the stars and the sea, we can consider selling covered call options.
The operation is also simple: you hold Bitcoin, select a high price at which you wish to sell (e.g., a certain percentage above the current price), sell call options at the corresponding strike price, and collect the premium.
There are also two outcomes: if the price does not rise to that high price, the call becomes worthless, and you keep the premium while continuing to hold your assets. If the price does rise, you sell Bitcoin at the agreed high price, and the actual amount you receive is slightly lower than the market's highest price, but you have locked in profits and converted them into cash.
This exemplifies being fearful when others are greedy. You not only received the premium but also sold at a high price amid the frenzy.
3. The Premise for Dual Benefits in Bull and Bear Markets: Belief
Jiao Lian emphasizes that these two strategies can be effective only if they are based on an underlying belief: that the underlying asset (i.e., BTC) will definitely rise in the long term.
Without this belief: selling puts in a bear market will force you to buy a zeroed asset at a high price. Selling calls in a bull market will lead you to sell valuable assets cheaply before a significant rise.
With this belief: selling puts in a bear market means you are happy to buy at low prices when prices drop or collect rent when they don’t. Selling calls in a bull market means you are pleased to sell at high prices when they rise or collect rent when they do not.
Regardless of the price movement, you are a winner. This is the calmness of a long-term holder.
4. Risks and Costs: There’s No Free Lunch
Of course, both strategies carry costs and risks.
The risk of selling puts: if the price of Bitcoin falls far below your strike price, you will have to buy at a higher price, leading to a loss on paper. However, as long as you believe it will rebound in the long term, this loss is temporary.
The cost of selling calls: if the price of Bitcoin rises far above your strike price, you will sell at a lower price, missing out on the large profits. This can be painfully frustrating. But as long as your sale is not speculative, for example, to improve your living conditions, there is nothing to regret.
So, after a small trial to familiarize yourself with your needs and the tool's capabilities, deciding whether to utilize them extensively is not too late.
5. Conclusion: From Passive Holding to Active Rent Collection
Goldman Sachs's new fund essentially moves the traditional financial technique of Covered Calls, which has been played for decades, into the realm of Bitcoin. The involvement of traditional institutions also signals that Bitcoin is evolving from a purely speculative asset to a cash-generating income asset.
For ordinary holders and Bitcoin hoarders, there's no need to buy Goldman Sachs's fund; taking actions yourself can be more flexible and cost-effective. Selling puts in bear markets and selling calls in bull markets, as long as you have a belief in a long-term rise, can allow you to maneuver through market transitions with ease, enjoying both price appreciation and rental income.
Long-term holding is not about merely holding on but using tools to make time work for you.
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