Xrp
The $ 4 strike call options experienced a heavy block trading activity this week, despite the drop in prices.
The data followed by Amberdata shows that a million contracts of the $ 4 calling option on December 26 changed hands via an exchange of blocks on Monday. Denibute contracts are dimensioned 1,000 XRP. An exchange of blocks is a large transaction which is negotiated in private and executed at the counter, then listed on the scholarship.
The $ 4 call represents a bet that the price of the cryptocurrency focused on payments will increase beyond this level at the end of December.
However, the wave of activity for the $ 4 call does not necessarily point out a bullish feeling. Observers note that trade in blocks was probably part of a covered call strategy, where higher calls outside the strike – like the $ 4 strike – are written (sold) Against existing assets on the market.
In other words, the Wholesale Bloc trade involved a user writing the $ 4 call rather than buying it in anticipation of a price rally. The option has probably been acquired by market manufacturers, the role of which is to create liquidity of orders and maintain neutral exposure on the market.
“I guess that a large holder made covered calls,” the head of business development of deribit Asia Business Development, Lin Chen, told Coindesk.
The covered call strategy is to write higher calling for a long position on the cash market. This helps the investor to obtain an additional return in addition to the parts reserve, which comes from the premium received for the sale of the call option. The configuration, however, limits potential increases.
The covered call strategy is popular among BTC holders, and its growing adoption has contributed to a constant drop in implicit volatility in the past two years.
The price of XRP fell briefly at $ 2.94 on Monday, following the wider market fainting and has since stabilized just above $ 3. Prices reached a record summit of more than $ 2.6 last month, according to Coindesk data.
