Publicly traded miners very much embrace the HODL, or “hold on for dear life,” mantra, hoarding tokens to make their stock more appealing to investors seeking exposure to Bitcoin’s gains.
Instead of selling Bitcoin to raise money, firms like Marathon Digital Holdings Inc.
The firms are exploiting an open secret in the options market: contracts frequently expire worthless.
If a miner sells a call with a $50,000 exercise price and Bitcoin fails to rise to that level by the time the contract expires, the miner makes money.
That risk can be mitigated by trading multiple contracts with different strike prices, but it’s something that has to be factored in.
Public miners have been on the lookout for yield-generating strategies to fund their rapid expansion without issuing new shares or debt.
That can be helpful to options sellers, because it reduces the chance that the option strike price will be hit and the contract becomes profitable for the buyer.