Preface

This article delves into the burgeoning activity in PowerTrade's altcoin options market, primarily driven by XRP, SOL, and DOGE amidst increasing market volatility. Traders are leveraging this volatility, seeking out opportunities in derivatives for both hedging and speculative purposes. The dynamic nature of the market presents potential gains and risks that market participants need to navigate judiciously.

Lazy bag

PowerTrade is seeing a rise in altcoin options trading, particularly in XRP, SOL, and DOGE, thanks to market volatility. This has spurred traders to engage in hedging and speculative activities to exploit these movements.

Main Body

The activity in PowerTrade's options market for alternative cryptocurrencies or altcoins has seen significant momentum this week, catalyzed by heightened market volatility. This has prompted traders to increasingly seek derivatives options as tools for hedging against risks and seizing speculative opportunities. In particular, XRP options trading volumes have experienced a dramatic increase, exceeding $5 million this week. The majority of this trading is focused on short-dated expirations, with balanced flows between put options at strike prices between $1.80 and $1.98, and call options at strikes between $1.80 and $1.93. Bernd Sischka, head of institutional sales at PowerTrade, mentioned that this pattern of activity indicates traders are positioning themselves for possible short-term price shifts. These shifts could result from both regulatory developments or a breakout pattern, with a near-equal mix of bullish and bearish strategies. The market action aligns with the volatile nature of the current crypto climate, as evidenced by XRP's movements — slipping to a five-month low of $1.61 before rebounding to $2 — as per CoinDesk data. Call options provide buyers the right, though not the obligation, to secure the underlying asset at a pre-established price either on or before a specific date. Buyers of call options generally maintain a bullish outlook on the market's future direction, whereas put buyers are typically bearish, aiming to profit or protect against potential price declines.

Additionally, traders have shown significant interest in SOL options, as hedging activity intensifies with puts at strike prices ranging between $104 to $121. The programmable blockchain Solana's native cryptocurrency, SOL, briefly touched $95 following market-wide risk aversion triggered by the U.S.-China trade conflict. Despite these macroeconomic tensions, SOL rebounded to $115 soon after.

Meanwhile, traders continue to pursue gains in dogecoin, the leading meme cryptocurrency by market value. Dogecoin's price dipped to 13 cents early in the week but has since recovered to 15.7 cents. It has experienced a significant decline, falling over 65% from its December peak of 48 cents. The market's most popular options trades for DOGE have been calls set at 14.5, 15.5, 17.5, and 18 cents, with all expiring on April 13. This popularity reflects a strong speculative trend. Bernd Sischka observed that much of the trading flow is indicative of pure momentum trading. Traders are engaged in short-dated, low-premium bets aimed at capitalizing on swift price surges, likely driven by social media or event-triggered catalysts. This activity has thrust altcoin options into the spotlight, propelled by short-dated expiries and directional bets.

However, it is crucial to note that the altcoin options market, although growing, remains considerably smaller than the more established bitcoin and ether options markets. These are mainly dominated by Deribit, where contracts worth millions are traded on a daily basis.

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