Grayscale: Zcash Covered Call Strategy Implies ~70% Annual Yield, But Risk Is Higher Than Bitcoin

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Grayscale highlighted that Zcash's covered call strategy could yield approximately 70% annually, but the risks exceed those of Bitcoin. Bitcoin’s volatility has declined to around 40% from over 125% earlier, nearing levels seen in Big Tech stocks. Zcash’s volatility remains significantly higher at approximately 140%. The firm warned that losses can still occur if prices fall below the premium levels. Investors should carefully evaluate the risk-return profiles. Bitcoin’s recent developments suggest the asset is maturing, while Zcash remains considerably more volatile. Covered calls may be suitable for risk-tolerant traders.

CoinDesk reports that on September 9, Gray Scale Research Head Zach Pandl stated that as Bitcoin matures, its price volatility has significantly declined. Bitcoin’s realized annualized volatility in its early stages was approximately 125%, while over the past year, it has averaged only around 40%, nearing the levels of the U.S. “Magnificent Seven” tech stocks. In contrast, Zcash’s market cap is only about 1% of Bitcoin’s, and over the past year, ZEC’s price volatility averaged approximately 140%. Based on current volatility levels, a covered call strategy on Zcash would yield an implied annualized premium income of around 70%, compared to approximately 30% for Bitcoin using the same strategy. Pandl cautioned that higher potential returns come with greater risk; if the spot price falls by more than the premium received, a covered call strategy can still result in principal loss. Investors seeking a clearer risk-reward profile may consider buying call or put options.

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