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Every year, someone in crypto declares that onchain options are about to take off. Every year, we’re left waiting.

It’s DeFi’s version of the boy who cried wolf. Say it enough times and people stop listening.

Well, here I am, about to do it again.

But in my defense, the wolf did eventually show up.

And if you’ve been reading for a while, you’ll know I’m crying wolf twice in the same year. Back on April 28th, I wrote a piece called: The End of Easy Yield, and the Rise of Onchain Options - Why volatility, not emissions, may define the next era of DeFi yield.

That piece was partly inspired by Nick Forster’s “Yieldmaggedon,” which got me thinking. It also came during a rough stretch for DeFi, when it felt like something was blowing up or getting exploited every other day. Reliable yield sources seemed harder to find, and options looked like an interesting fit.

But many had already given up on onchain options. The thinking was that they were too complicated to attract a meaningful user base, even within DeFi’s already niche audience.

That skepticism is still alive and well. When I posted this the other day, a couple of people got a bit snarky in the replies:

They were channeling their inner Regina George:

But why do I have renewed confidence now?

There’s a few factors. But let’s start with Kool Aid man…

Kool came on my radar earlier this year. In fact, I DM’d him back in April after reading some of his work on HyperEVM. We had a lot of overlap in the names we were following, particularly KNTQ (Kinetiq), which we were both bullish on. But also DRV (Derive), which I saw making strong progress:

I missed a zero on the ticker above, and somehow never bought. It just kept running away from me.

Eventually, I started paying more attention to the options strategies Kool was sharing. He appeared to be learning in the open, but seemed to get a strong handle on things pretty quickly.

I think a lot of us started to realize Kool wasn’t your average DeFi anon. Behind that big red Kool-Aid exterior was someone with a serious feel for markets.

But something changed when he started posting Derive PNL cards. We’ve seen perps traders share those forever. I couldn’t remember seeing it become much of a thing on CT with options.

I think that was signifcant because people haven’t had many visible examples of what a big win with crypto options actually looks like. Derive, Kool and those PNL cards brought it all together in a way that has made people pay attention.

And if we’re heading into another bull market, I can’t think of a better time for more of CT to learn what’s possible with onchain options. More on that later.

First, look at the card below. Kool put on a big bet when the market seemed split between calling for a double bottom and declaring the bottom was already in.

I’d barely seen anyone on CT post an options PNL card, let alone one showing a $3.5 million win 😂

But Kool isn’t just showing his wins.

He’s now talking about some of his recent setups more publicly.

For instance, there’s a trade he’s put on that’s currently going viral.

How do I know?

There’s a X handle called Derive Trade Tape that publishes options trades and this exact one just keeps coming up on my feed all day now. Also, both myself and DeFi Dad have copied it 😂

Further to that, most of my TG chats are buzzing about it too.

The trade in question is this one:

And it appears to be attracting some serious copy trading. Nick’s response gets at why I think this could become a much bigger opportunity:

DCF God has since put on the same structure, risking $238k:

What interests me is how a longer dated options setup gives people something to study and potentially follow over time. You can look at Kool’s trade, understand the thesis and decide whether the pricing still makes sense for you.

That doesn’t mean entry timing stops mattering. You could get a much better or worse price than he did, and copying the structure doesn’t mean copying his risk/reward. But I think sharing these setups publicly could get a lot more people learning about and using options.

So what is actually happening with the viral ETH bull call spread here?

Essentially you buy the $5,000 ETH call and sell the $7,000 call, both expiring March 26, 2027. Selling the higher call makes the trade cheaper, but caps your upside at $7,000 ETH. You’re betting on a big rally while giving up any gains beyond that. Your maximum loss is what you paid upfront.

So he risked $273k (max loss) with a shot at $19.73M (max profit).

As I’m sure many would know, you don’t have to hold this to expiry. Say there is a violent move higher in October and ETH pushes to $3500. The spread could gain value before expiry, giving you an opportunity to take some profits.

The Derive team have toiled away for half a decade now trying to make the onchain options vision become a reality.

It’s been evident over the last 10 - 12 months that they’ve finally been finding early signs of product market fit.

All this has happened on Derive V2. Now we are on the eve of Derive V3 which is promising a lot of upgrades and improvements in the V3 governance proposal:

What stands out from the above technical attributes and QOL upgrades is this line: “A simplified integration experience for builders and institutional partners”. That is one way of saying: Builder codes.

Why is that important?

This to me is one of the massive improvements onchain options have over their offchain counterparts. In fact, Nick even mentioned this in written interview we did together:

I’ve used options in my brokerage before, including long dated calls. But our recent podcast with Kool, and following his trades on Twitter, made things click in a different way. Whether that translates into successful trades is another question.

DeFi Dad and I have been going back and forth on this over a couple of long phone calls. We’ve probably made 30 to 40 angel investments together over the years, and he’s done plenty more on his own. And we started asking ourselves: what are we actually betting on when we write those checks?

Let’s use a round number, say you invest $10,000 in a startup. You’re backing an idea and a team you might not know particularly well. They still need to build the product, find customers, reach product market fit and turn it into something valuable. The dream is a 50x or 100x, turning that check into $500,000 or $1 million. But plenty never get there. Some teams struggle, some quit, and sometimes you write the whole thing off. That’s before accounting for your stake getting diluted in future funding rounds.

Then I look at Kool’s ETH call spread.

Here’s an asset I’ve followed for years, with more than a decade of market history and an ecosystem I know intimately. At the pricing shown earlier, a $10,000 outlay would imply roughly $723,000 in maximum profit before fees, assuming the same fills. That maximum requires ETH to finish at or above $7,000 on March 26, 2027.

That’s the kind of upside we’ve been chasing through angel investing, expressed through an asset I’m much more comfortable forming a view on.

There’s a big distinction, though. ETH can succeed over the long term and this trade can still go to zero. It needs to move far enough within a specific window. A familiar asset doesn’t automatically make the option a safer bet.

But personally, I find that a more understandable bet than trying to predict whether an early startup will find product-market fit and become a huge business. That was the realization for us. It made me rethink where I want to take these kinds of risks.

None of this means these trades will work out or that I’ve found some money printer and hopefully I don’t sound like this guy 😂 :

I’m also starting to think more about the defensive side. I hold ETH, HYPE and Bitcoin, and often borrow against them, so selling my collateral isn’t always straightforward. Options could give me ways to hedge some downside while keeping the underlying assets. That protection costs money, and I’d still need to manage the loans and liquidation risk, but it’s something I want to get better at.

Then there’s the simple convenience. I’m on the West Coast. By 1 p.m., the regular stock market session is over. With Derive, I can request a quote at any hour. Getting a fill at a price I like is another matter, but having that access is a big deal.

I came away from these conversations wanting to make options a much bigger part of my toolkit.

Remember none of this is financial advice.

1. Go to Derive
Open app.derive.xyz and connect your wallet.

2. Deposit
Hit Deposit. Bridge USDC from Ethereum, Arbitrum, Optimism, Base, or HyperEVM.
Wait until Buying Power shows a real number (usually a few minutes). Don’t skip this. Request Quote stays dead until you’re funded.

3. Open Strategy Builder
From trade / options, open Strategy Builder.

4. Stay bullish
Market: ETH. Strategy: Call Spread (buy lower call, sell higher call).

5. Set the legs
Example (what’s on screen):
- Buy Mar 26 ’27 $5000 call
- Sell Mar 26 ’27 $7000 call
Same expiry. Ratio 1:1.

6. Size it
Enter Amount (ETH notional). Check Max loss = roughly what you can lose. Keep it under your Buying Power.

7. Request Quote → Buy to Open
Hit Request Quote. Makers respond. If the debit looks fair vs mark, Buy to Open. If it’s too rich or you change your mind, Cancel RFQ.

8. Confirm
Check Positions for the package (+ lower strike / − higher strike), avg cost, and unrealized PNL.

If you’re wondering why you can’t just show an app the trade you want and have it help you put it together, I had the same thought.

That’s what I’m helping build.

A few months ago, a friend and I started kicking around DeFi ideas. We kept coming back to onchain options as a corner of the market that hadn’t really arrived, but felt overdue. The original idea was to find a clever way to earn yield from options and make it simple enough for people to actually use.

But it evolved from something I was already doing myself.

Before this recent wave of excitement, I was going back and forth between ChatGPT and my brokerage. I’d screenshot puts, calls, different strikes and IVs, then ask ChatGPT to walk me through what I was looking at. What does this trade actually do? What am I risking? How would I express this view?

It helped immensely but I was still bouncing between the conversation and the place where I could put the trade on.

So we started asking: why can’t this all happen in one place?

Describe what you’re thinking, work through the trade with an AI, understand the potential outcomes, then execute on Derive from the same terminal.

That’s what we’ve been building with Overwrite.

I’m still figuring out how involved I want to be, and my role will probably be more advisory. But it’s something I’ve wanted for myself, which is a pretty good reason to help bring it to life.

Options still take some learning. I just think the tools can do a much better job of helping people along.

For example, I copied Kool’s viral ETH call spread card from X, pasted it into Overwrite and asked: “Copy this trade from Kool Krypto, but size it at 200 contracts.”

It built the spread, adjusted the size and had it ready for me to review and execute:

You can still adjust the size and other trade parameters in this window. We’re also continuing to refine the product.

From our conversations with the Derive team, Overwrite was the first agentic platform to both open and close a trade on Derive V2.

We’re now building for Derive V3, with the goal of launching Overwrite alongside it or shortly after.

If you want to try it, you can join the waitlist below:

Thanks for reading!

DISCLAIMER: Nothing written in The Edge Newsletter or said on The Edge Podcast is a recommendation to buy or sell tokens or securities. This content is for educational and entertainment purposes only. Nothing shared here is financial advice. Any views expressed in our content are solely the opinion of that writer, host, or guest. Always do your own research. DeFi Dad, Nomatic, and guests may have positions in the assets or other matters discussed in this content.