XRP
The purchase options on the $ 4 strike have experienced a commercial activity of heavy blocks this week, despite the price decrease.
Amberdata traced data show that one million contracts for the purchase option of $ 4 that expire on December 26 changed hands through a block trade on Monday. Delibit contracts are 1,000 xRp size. A block trade is a great transaction that is negotiated and executed privately at the counter and then listed in the exchange.
The call of $ 4 represents a commitment that the price of the cryptocurrency centered on payments will increase beyond that level by the end of December.
However, the increase in the activity of the call of $ 4 does not necessarily indicate a bullish feeling. The observers point out that the block trade was probably part of a covered call strategy, where more calling calls are written out of money, such as the $ 4 strike. (sold) Against existing spot market holdings.
In other words, the great block trade involved a user who wrote the call of $ 4 instead of buying it in advance of a price rally. The option was probably acquired by market manufacturers, whose role is to create orders books and maintain exposure to the neutral market.
“I guess a great headline was making covered calls,” said the Chief of Commercial Development of Asia de Decenibit, Lin Chen, Coindesk.
The covered call strategy implies writing purchase options outside the money of greatest strike in a long position in the spot market. This helps the investor to obtain additional yield in addition to the booth of currencies, which comes from the premium received for selling the purchase option. The configuration, however, limits the possible upward profits.
The calling call strategy is popular among BTC holders, and its growing adoption has contributed to a constant decrease in implicit volatility in the last two years.
The XRP price briefly fell to $ 2.94 on Monday, tracking the fainting in the broader market and since then it has stabilized just above $ 3. prices reached a maximum record of more than $ 2.6 last month, as shown in Coendesk’s data.
