Surge in XRP Options Activity on Deribit Amid ETF Speculation

Surge in XRP Options Activity on Deribit

Deribit, the burgeoning options trading platform, is witnessing a remarkable uptick in trading activity centered around XRP, particularly highlighted by the $1.10 call option. This option represents a strategic bet that prices for the payments-oriented cryptocurrency will double by the end of the month.

As of the latest data, the $1.10 call option, which is set to expire on August 28, boasts an impressive open interest of 4,347,000 contracts, valued at approximately $2.44 million. This makes it the most popular choice among all available XRP options on the platform, as per the analytics provided by Amberdata. Such figures are particularly notable for an options market that is still in its infancy, having launched only five months ago.

The open interest, which indicates the number of active positions currently held, has surged by 838,000 contracts within just this five-month timeframe. Griffin Ardern, head of options trading and research at the crypto financial platform BloFin, suggested that the heightened activity surrounding the $1.10 call option likely indicates a net long positioning among traders.

“Analyzing the gamma distribution suggests that we are experiencing a net long position set to expire on August 30. If XRP can break through the resistance level of $0.75 that has persisted for the last two weeks, we could see the price rise above $1.10,” Ardern explained during an interview with CoinDesk. He further speculated, “There’s also the possibility that institutions may soon apply for an XRP ETF in the U.S., which could serve as a significant catalyst for a rapid price increase.”

Despite a strong rally last month where XRP surged over 30% to reach 62 cents, the price has since retraced to just over 57 cents, according to CoinDesk metrics. A call option provides the buyer with the right, but not the obligation, to purchase the underlying asset—XRP—at a specified price before the expiration date. Investors who buy call options typically hold a bullish outlook, anticipating a price increase above the purchase level. The term “gamma” refers to the rate of change in an option’s delta, indicating how sensitive the option’s price is to fluctuations in the price of the underlying asset.

CoinDesk has reached out to Deribit for additional insights on this trend. Last Wednesday, U.S. District Court Judge Analisa Torres ruled on a motion from the Securities and Exchange Commission (SEC) regarding Ripple Labs, stemming from a lawsuit initiated in 2020 over unregistered sales of XRP. The court imposed a $125 million penalty for institutional sales of XRP and issued an injunction against further violations, while denying the SEC’s request for a staggering $2 billion fine. Ripple celebrated this ruling as a significant victory, igniting optimism surrounding a potential XRP ETF debut in the U.S.

With the SEC already approving bitcoin and ether ETFs earlier this year, the landscape seems ripe for institutional investments amounting to billions of dollars. However, Martin Cheung, an options trader at Pulsar Trading Capital, expressed some skepticism about whether XRP prices could realistically surpass the $1.10 mark by the August 28 expiry date. “XRP has already seen substantial growth this year. I believe many traders are positioning themselves for the next wave of ETF approvals, likely including XRP and SOL,” Cheung noted when discussing the surge in demand for the $1.10 call options. He added, “That being said, the end of August is just around the corner; while a potential XRP ETF announcement could indeed propel prices by perhaps 20%, reaching $1.10 seems overly ambitious.”