Zcash Options Offer Higher Premium Income, but at Greater Risk

Zcash has been on an absolute tear in recent months, with its price surging over 142% in just one month to reach $1,236. As its market capitalization remains at just 1% of Bitcoin's, ZEC's significantly higher price volatility compared to BTC makes options a particularly useful tool for risk management and potential premium income.

According to Grayscale Head of Research Zach Pandl, the smaller market capitalization and higher price volatility of Zcash make options especially compelling. While Bitcoin has become less volatile over time, with realized annualized volatility averaging around 40% in recent years, ZEC's price volatility has averaged about 140% over the past year.

Pandl notes that covered call strategies on Zcash could generate premium income equivalent to an implied yield of 70%, compared to an annualized yield of about 30% currently available through Bitcoin covered call strategies. However, he also warns that this higher potential income comes with greater risk, as capital losses can occur when the underlying spot price falls by more than the premium received.