A crypto whale has made a $224,000 bet that XRP’s price stays perfectly flat through June
The trader collected about $224,500 in premiums and will keep the full amount if XRP remains close to $1.40.
What to know:
- A large trader booked a “short strangle” strategy on Deribit, expecting XRP to stay close to $1.40 till the end of June.
- The trader collected about $224,500 in premiums and will keep the full amount if XRP remains close to $1.40.
- The low-volatility wager comes as macroeconomic pressures and a key U.S. crypto regulatory bill, the Clarity Act, raise the prospect of bigger price swings.
The trade likely involved a whale or an institution executing what is known as the “short straddle” strategy by shorting (selling) 1.5 million contracts of both the $1.40 call and put options expiring on June. 26.
By selling both the call and put, the trader is effectively providing insurance against sharp price movements away from the $1.40 strike. The trader received an upfront premium of $224,500 for assuming this volatility risk.
The trader will retain that amount as profit if XRP remains near $1.40 through June 26.
Hence, the bet is essentially on volatility to stay low, with prices pinned near $1.40. The payments-focused cryptocurrency has largely traded between $1.30 and $1.50 since February, according to CoinDesk data.
The strategy is not without risk. A sharp move in either direction would turn the position unprofitable, requiring the trader to cover losses owed to option buyers.
