Key Points:

• A million contracts of the $4 XRP call option, which expires on December 26, were traded via a block transaction.
• The substantial transaction probably formed part of an investor’s covered call strategy.

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This week, there has been notable block trading activity with XRP call options pegged at a $4 strike price, occurring even as the price of the cryptocurrency has recently decreased. An analysis by Amberdata highlights that one million contracts were exchanged through a block trade on Monday, with each contract consisting of 1,000 XRP. Typically, a block trade is a large, privately negotiated transaction executed over the counter, later recorded on the exchange.

The $4 call suggests a belief that XRP’s value will exceed this threshold before the end of December. However, the heightened activity surrounding this call may not indicate optimistic sentiment. Analysts suggest the trade aligns with a covered call strategy, where options are sold against current holdings, generating income but capping potential gains.

Lin Chen, the Asia head for business development at Deribit, commented, “I would guess some big holder was doing covered calls.”