Japanese investment firm Metaplanet said it generated 23.9 Bitcoin ($1.4 million) in premium income from the sale of 223 Bitcoin put options to QCP Capital, a Singapore-based digital asset trader. The premium collected was 0.1075 Bitcoin per contract, the company said in a statement Thursday.
Metaplanet said this deal allows it to take advantage of Bitcoin’s volatility, earning premium income while keeping its position fully hedged with cash. By selling 223 Bitcoin put options, Metaplanet is also able to increase its Bitcoin holdings if the market price falls below the $62,000 strike price at expiration.
“This strategy not only increases the company’s Bitcoin reserves, but also strengthens its balance sheet, aligning with our ongoing financial strategy to strengthen long-term Bitcoin exposure and improve the company’s financial position, supporting its path to profitability.” – It added.
A put option gives the buyer the right, but not the obligation, to sell a specified amount of Bitcoins at a set strike price before or on a specified expiration date.
If the price of Bitcoin falls below the strike price by the expiration date, the buyer will usually exercise this right. As a result, the put option seller must buy Bitcoin from the holder at the agreed-upon strike price.
This week Metaplanet announced that it had acquired an additional 107.9 Bitcoin worth 1 billion yen ($7 million). In total, Metaplanet has now accumulated 530.7 Bitcoin worth about 4.96 billion yen ($34 million).