Covered Calls and Cash-Secured Puts in DeFi: What They Are and What Onchain Orders Can and Can’t Do
On November 7, 2026, Péter Szilágyi, founder of dark_dot_bio and lead developer of Go Ethereum from 2015 to 2025, posted a rant on X about Ethereum’s issuance debate. The replies turned into a long debate, and this guide follows one side conversation from it.
“the reason everyone stakes ETH is because there isn’t anything else to do with it!”
https://x.com/peter_szilagyi/status/2119121477706416322
AllThingsEVM.eth quote-tweeted him, saying he has about 90% of his net worth in ETH. Later in the thread, he says he wants to do two things he’d normally do with options: get paid to wait to buy more ETH lower, and get paid to sell some if the price ran up. He couldn’t find a way to settle either trade in ETH on-chain.
https://x.com/AllThingsETH/status/2119166872750895550
Ceazor, a DeFi educator and self-proclaimed Degen, described the setup he uses instead: a yield-bearing stablecoin sitting in a range buy order. AllThingsEVM.eth agreed it was “a similar mechanism to cash-secured puts”, noted what it was missing, and said he still couldn’t find a good onchain version of a covered call.
https://x.com/Ceazor7/status/2119187087094321218
This guide walks through that conversation, explains what covered calls and cash-secured puts are, and the misconceptions that come up when people try to copy them in DeFi. It also covers how Ceazor’s setup works and why it’s clever, and how the covered-call side can be built the same way on Carbon DeFi, built by Bancor.
Note: See the glossary at the end for any unfamiliar terms used in this publication.
What is an option?
An option is a contract that gives its buyer the right, but not the obligation, to buy or sell an asset at a set price (the strike price) before or on a set date (the expiry). The buyer pays the seller up front for that right. That payment is the premium, and the seller keeps it regardless of whether or not the buyer ends up trading the asset.
There are two kinds:
A call option gives the buyer the right to buy at the strike price.
A put option gives the buyer the right to sell at the strike price.
Covered calls and cash-secured puts are the two ways long-term holders most often sell options. In both, you’re the seller, so you collect the premium.
What is a cash-secured put?
A cash-secured put is a put option you sell while holding enough cash to buy the asset at the strike price if you have to.
Say ETH is at $2,100 and you’d be happy to own more at $1,800. You sell a put with an $1,800 strike and set aside $1,800 in USDC for each ETH. You collect the premium straight away.
If ETH stays above $1,800 until expiry, you keep the premium and your cash. If it falls below $1,800, the buyer can exercise the option, and you have to buy the ETH at $1,800 even if the market price is lower by then. You still keep the premium, so your effective cost is $1,800 minus the premium you collected.
It’s a way of getting paid while you wait to buy lower.
What is a covered call?
A covered call is a call option you sell on an asset you already own.
Say you hold ETH at $2,100 and you’d be happy to sell some at $2,600. You sell a call with a $2,600 strike and collect the premium.
If ETH stays below $2,600, you keep the ETH and the premium. If it goes above $2,600, your ETH is sold at $2,600, and you keep the premium, but you miss any gain above that price.
It’s a way of getting paid while you wait to sell higher.
Why are these hard to do onchain?
Options exist in crypto, but most of the trading happens on centralized exchanges, and those contracts usually pay out the price difference rather than delivering the token itself. AllThingsEVM.eth wanted something else: to keep everything onchain, in ETH, with the trade settling in the actual token.
Onchain options venues are growing but still a small share of crypto options trading. Fewer venues mean fewer strike prices and expiry dates to choose from, and less volume to trade against — the reason ETH holders look for workarounds, and unfortunately, where most of the misconceptions start.
Common misconceptions about copying options in DeFi
“A buy order below the market is a cash-secured put”
It’s close, and the thread got this part right. Both commit your cash to buying at a lower price, and both leave you holding the asset if the price falls. The difference is the premium. When you sell a put, someone pays you up front for taking on the risk that the price might fall. A limit or range order pays you nothing for that risk. As AllThingsEVM.eth put it, it doesn’t get “the volatility priced in”: the premium on an option goes up when the market expects bigger price swings, and an order has no equivalent.
https://x.com/AllThingsETH/status/2119189317616603478
“Concentrated liquidity is a covered call”
Concentrated liquidity on a typical AMM does sell ETH as the price rises through your range, which is why it gets compared to a covered call. But the position works in both directions. If ETH climbs into your range and then falls back, the pool buys the ETH back, and you end up holding more of the asset that fell. You earn trading fees along the way, not a premium. A covered call that’s exercised stays sold.
Concentrated liquidity on Carbon DeFi works similarly to that on a typical AMM, though it is free of tick constraints, does not rely on pre-existing pools or token pairs, and the trading fees earned are auto-compounding. See ‘New Feature: Concentrated Liquidity’ for more.
“Earning yield through a price range means you hold ETH exposure”
Some yield products let you choose an ETH price range, but they only use an oracle’s ETH price to calculate your returns. You never hold or receive ETH. AllThingsEVM.eth raised this himself: in those products, “ETH” is a reference price, not the underlying token. If you want to end up owning ETH, or to actually sell the ETH you hold, the trade has to settle in the token.
“If my order doesn’t fill, I’ve earned nothing”
This is the misconception the trader’s setup solves. With cash sitting in USDC, an order that never fills just leaves you where you started. If the cash is a yield-bearing token instead, the waiting time earns a return. That’s the closest thing to a premium you can build with an order, and it’s the core of the strategy below.
The yield-bearing range order: how the strategy works
Ceazor’s suggestion, in his own words, was to “use interest bearing stable coins” in a range limit order on Carbon DeFi.
Here’s what each part does:
The cash side: sfrxUSD.
sfrxUSD (Staked Frax USD) is a stablecoin that earns yield. You stake frxUSD, a dollar stablecoin, and get sfrxUSD back. Each sfrxUSD becomes redeemable for a little more frxUSD over time, so its price rises. As of November 9, 2026, its base yield was 5.30% a year, according to DefiLlama.
The order: a buy range order.
On Carbon DeFi, a range order buys gradually across a custom price range you set.
As the price moves down through your range and takers trade against it, more of your budget converts. Amounts that have filled don’t reverse if the price bounces back.
The thing you buy: wstETH.
Ceazor’s “bonus points” tip was to buy wstETH instead of plain ETH. wstETH (wrapped staked ETH) is staked ETH in a form that earns Ethereum staking rewards. Like sfrxUSD, it doesn’t add tokens to your wallet; each wstETH becomes worth a little more ETH over time. As of November 9, 2026, the 7-day average staking APR on stETH, the token wstETH wraps, was 2.33%, according to Lido’s API.
Put together, the order works like this:
If ETH never falls into your range, your sfrxUSD stays in the order and keeps its yield.
If ETH falls into your range, your sfrxUSD gradually buys wstETH, which then starts earning staking rewards.
If ETH dips into your range and bounces, whatever already filled stays filled. You keep the wstETH you bought, and the rest of your sfrxUSD stays in the order.
Why the setup is clever
Your capital never sits idle. With a cash-secured put, the cash backing the trade often earns little or nothing while it waits. Here, the cash earns its own yield and the asset you end up with earns its own yield, so you’re earning on both sides of the trade, before and after the fill.
There’s no expiry to manage. An option expires, and to keep the trade going you have to sell a new one, often called “rolling”. A Carbon DeFi order has no expiry date. It stays onchain until it fills or you edit or close it.
A range averages your entry. A put has one strike price. A range order buys across several prices, so you don’t have to perfectly predict the bottom.
The fill settles in the real token. You end up holding wstETH, with no oracle price involved.
What it doesn’t give you
The yield is the only premium. Nobody pays you for agreeing to buy in a falling market, and the yield doesn’t rise when the market gets more volatile. The order also fills only when a taker trades against it, so it can fill partly, later than expected, or not at all.
One thing to check when you set your prices
Carbon DeFi orders are priced in the pair’s tokens. In a wstETH/sfrxUSD pair, your range is in sfrxUSD per wstETH, and neither token is worth exactly $1 or 1 ETH.
On 9 November 2026, CoinGecko had ETH at about $2,119 and wstETH at about $2,646, so one wstETH was worth about 1.25 ETH. To buy when ETH is around $1,800, the range has to sit near $2,250 per wstETH, divided by sfrxUSD’s own price. Both tokens also drift as they earn, so if your order waits for months, it’s worth rechecking the range and editing it if needed.
The covered call side: what the thread said was missing
In his last reply, AllThingsEVM.eth said the closest thing he could find to a covered call was concentrated liquidity, which sells ETH at the top of a range, or a yield product that tracks ETH through a range using an oracle price. As the misconceptions above show, the first reverses if the price falls back and the second never settles in ETH.
On Carbon DeFi, the covered call side is the same strategy run in the other direction.
You put wstETH in a sell range order above the current price:
While you wait, the wstETH keeps earning staking rewards.
If ETH rallies into your range, the order gradually sells your wstETH for the token you paired it with, such as sfrxUSD, which then starts earning its own yield.
If ETH rallies and then falls back, the amount that sold stays sold. A range order works in one direction, which is closer to how an exercised covered call behaves than a two-way liquidity position.
What you sell is the real token. The order holds your wstETH and delivers it to the taker; there’s no oracle in the trade.
Both sides together: the onchain “wheel”
Options traders often run the two trades in sequence, known as the wheel: sell cash-secured puts until you’re assigned the asset, then sell covered calls on it until it’s sold, then go back to puts.
A Carbon DeFi recurring order links a buy range and a sell range in one strategy. Tokens bought on the buy side fund the sell order, and the proceeds from the sell side fund the buy order again. The cycle repeats until you stop it, with no bot to run, and you can start with only one side funded. With sfrxUSD on the buy side and wstETH on the sell side, both halves of the strategy hold yield-bearing tokens. As one order fills, newly acquired tokens automatically rotate to fund the opposite order. The cycle continues for as long as the token pair is trading within those parameters, or until the trader edits their strategy.
How to set it up on Carbon DeFi
Open the app on Ethereum. Go to app.carbondefi.xyz, choose Ethereum and connect your wallet.
Choose your preferred pair. In Ceazor’s case, he’s suggested a strategy consisting of wstETH and sfrxUSD. Use wstETH rather than stETH: stETH is a rebasing token, and Carbon DeFi supports only standard ERC-20 tokens.
Pick the strategy. Choose a range order to buy only (the put side) or sell only (the covered call side), or a recurring order for both.
Set your range and budget. Convert your target ETH prices into the pair’s prices first, as described above. On a buy order you deposit only sfrxUSD; on a sell order, only wstETH.
Review and sign.
Adjust if your plan changes. You can change prices, ranges, budgets, and strategy types onchain without withdrawing.
Your order executes only at prices within the range you set, with zero slippage, and immunity to MEV sandwich attacks. As of November 2026, makers pay no trading fee and no gas when their orders fill.
Frequently asked questions
Can you sell covered calls in DeFi?
There are onchain options venues where you can sell calls, but the choice of strikes and expiries is limited. Without an option, the closest equivalent is a sell order above the market on the asset you hold. On Carbon DeFi, a sell range order sells gradually as the price rises through your range, and what sells doesn’t reverse if the price drops. It doesn’t pay a premium.
Is a limit order the same as a cash-secured put?
No. Both commit cash to buying at a lower price, but a put pays you a premium for taking that risk, and a limit order doesn’t. If the cash in the order is a yield-bearing stablecoin, it earns that yield while it waits, which is the nearest equivalent.
What is the wheel strategy in crypto?
Selling cash-secured puts until you’re assigned the asset, then selling covered calls on it until it’s sold, and repeating. On Carbon DeFi, a recurring order links a buy range and a sell range so each side funds the other, without a premium on either side.
What is sfrxUSD?
Staked Frax USD, a yield-bearing stablecoin. Each sfrxUSD is redeemable for a growing amount of the frxUSD stablecoin, so its price rises as yield accrues. Its base yield was 5.30% a year on 9 November 2026, according to DefiLlama.
What is the difference between stETH and wstETH?
Both represent ETH staked through Lido. stETH pays staking rewards by increasing the balance in your wallet each day (rebasing). wstETH wraps stETH so the balance stays fixed and each token becomes worth more ETH instead. Carbon DeFi supports wstETH but not stETH, because rebasing tokens aren’t supported.
Does sfrxUSD or wstETH keep earning while it’s in a Carbon DeFi order?
Yes. Both tokens earn by rising in value rather than by changing your balance, so they earn the same way in an order as they do in your wallet.
What happens if ETH never reaches my range?
Nothing fills, and your tokens stay in the order. Carbon DeFi orders have no expiry date, so the order waits until it fills or you edit or close it, and you can withdraw at any time.
Is concentrated liquidity the same as a covered call?
No. Concentrated liquidity sells as the price rises through your range but buys back as it falls, and earns fees rather than a premium. A covered call that’s exercised stays sold. On Carbon DeFi, a range order works in one direction only.
Can you trade options on-chain?
Yes, on onchain options venues, but they’re still a small share of crypto options trading and offer fewer strike prices and expiry dates. Onchain orders aren’t options and don’t pay a premium. What they can copy is the buy-lower side of a cash-secured put and the sell-higher side of a covered call, using a range order that holds a yield-bearing token while it waits.
Set your own range
Choose the price you’d buy at, the price you’d sell at, or both, and let a yield-bearing token wait in the order until the market gets there.
Create a strategy on Carbon DeFi
How to scale in and out with range orders
How to automate buy low, sell high on repeat
This guide is for informational purposes only and is not investment or financial advice.
Glossary
Option: A contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a set price by a set date.
Strike price: The price at which an option lets the holder buy or sell.
Call option: The right to buy at the strike price.
Put option: The right to sell at the strike price.
Expiry: The date an option ends. After expiry, an unused option is worthless.
Premium: The price an option’s buyer pays its seller up front. The seller keeps it whatever happens.
Volatility: How much and how quickly a price moves. Option premiums rise when traders expect more volatility, which is what “volatility priced in” refers to.
Assigned / exercised: When an option’s buyer uses their right, the seller has to complete the trade at the strike price.
Cash-secured put: Selling a put while holding enough cash to buy the asset at the strike price. You’re paid a premium to wait to buy lower.
Covered call: Selling a call on an asset you already own. You’re paid a premium to wait to sell higher.
Rolling: Closing an option near expiry and opening a new one with a later date, to keep the trade going.
The wheel: Selling cash-secured puts until assigned, then covered calls until the asset is sold, and repeating.
Settle / denominated: Where a trade settles is what you actually receive (cash or the token). What it’s denominated in is the unit its price is quoted in.
Underlying: The asset an option or product is based on, such as ETH.
Oracle: A service that reports an offchain or cross-market price to a smart contract. A product priced by an oracle uses that number without holding the asset.
Spot: Buying or holding the asset itself, now, rather than a contract on it.
ETH issuance: The new ETH created as rewards for the validators who secure Ethereum. The thread began with a debate about how much there should be.
Staking: Locking ETH to help secure Ethereum in return for rewards.
Yield-bearing stablecoin: A stablecoin that earns a return, usually by rising in price against the dollar.
sfrxUSD: Staked Frax USD, a yield-bearing stablecoin redeemable for a growing amount of frxUSD.
stETH: Lido’s staked ETH token. Its wallet balance grows each day as rewards are paid (rebasing).
wstETH: Wrapped stETH. The balance stays fixed and each token becomes worth more ETH over time.
Rebasing token: A token that changes the balance in every holder’s wallet automatically. Carbon DeFi doesn’t support these.
APR / APY: Annual percentage rate is the yearly return without compounding. Annual percentage yield includes compounding.
Limit order: An order to buy or sell at one price you set.
Range order: On Carbon DeFi, an order that buys or sells gradually across a price range you set. Filled amounts don’t reverse.
Recurring order: On Carbon DeFi, a linked buy range and sell range where each side’s fills fund the other.
Concentrated liquidity: Two-sided liquidity placed within a chosen price range. It sells as price rises and buys as price falls.
Maker / taker: The maker places an order and sets the price. The taker trades against it.
Slippage: The difference between the price you expect and the price you get.
Buy the dip: Buying after a price falls, at a level you think is good value.
Bancor
Bancor is a pioneer in decentralized finance (DeFi), established in 2016. It invented the core technologies underpinning the majority of today’s automated market makers (AMMs) and continues to develop the foundational infrastructure critical to DeFi’s success — focusing on enhanced liquidity mechanics and robust onchain market operation. All products of Bancor, including Carbon DeFi and the Arb Fast Lane, are governed by the Bancor DAO.
Carbon DeFi — Powered by Bancor’s latest patented technologies: Asymmetric Liquidity and Adjustable Bonding Curves.
Live on Ethereum, Sei, Celo, COTI, and TAC.
The Arb Fast Lane — Carbon DeFi’s built-in solver system and DeFi’s most advanced arbitrage infrastructure, powered by Marginal Price Optimization, a new method of optimal routing.
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