1M XRP $4 Call Block Trade Reflects Covered Call Strategy
Data from Amberdata shows a block trade of one million XRP call options at the $4 strike expiring December 26 executed on Deribit on Monday. Each Deribit contract represents 1,000 XRP. Rather than a bullish bet on XRP call options, the large block trade likely reflects a covered call strategy: an investor wrote out-of-the-money $4 XRP call options against an existing XRP spot position to collect option premium and cap upside. Market makers likely bought the calls to provide liquidity and maintain market-neutral exposure. This surge in XRP options activity coincides with a recent price dip to $2.94 before stabilising above $3. The growing use of covered calls has contributed to reduced implied volatility across crypto markets, mirroring trends seen in bitcoin. Traders should note that such covered call block trades suggest a neutral outlook on XRP rather than a strong bullish signal.
Neutral
The block trade of one million $4 XRP call options was part of a covered call strategy, indicating an investor wrote out-of-the-money call options against a long XRP position to earn premium rather than anticipating a price rally. Market makers absorbing the calls further underscores neutral sentiment. Unlike outright purchases of call options that signal bullish bets, writing calls limits upside and reflects a yield-enhancement tactic on existing holdings. Similar patterns in bitcoin options markets have accompanied modest price movements and reduced implied volatility. In the short term, traders may see limited price swings as the covered calls cap gains, while in the long term, the increased supply of written options could keep volatility subdued. Overall, the news suggests a neutral impact on XRP’s price trajectory.