XRP Surge Spurs Straddle Trades Amid Volatility Bets

XRP, the cryptocurrency developed by Ripple for cross-border payments, surged by 12% in the past 24 hours, drawing unexpected attention from institutional traders betting on market volatility through straddle strategies. This sudden rise pushes XRP’s value to $3.32, marking its highest point since late July.

This notable price jump is being attributed to a rise in high-level option trades on Deribit, one of the leading crypto derivatives exchanges. These transactions, known as block trades, are privately executed deals that are large enough to influence markets if done publicly. Traders are opting for a strategy called a “long straddle,” aimed at capitalizing on dramatic price movements, regardless of direction.

One significant trade last Thursday included the simultaneous purchase of 100,000 call and put options expiring on August 29, both set at a $3.20 strike price. For this setup, the trader paid over $416,000 in premiums. Another similar transaction was made for options at the $3.10 strike. This approach reflects a bet that XRP will experience significant fluctuations soon, though the direction of the movement remains uncertain.

Speaking to CoinDesk, Lin Chen, Head of Asia Business at Deribit, noted a rising wave of institutional engagement with XRP options. “XRP has been outperforming bitcoin (BTC) this year, and we’re noticing a clear increase in block trades and options interest,” Chen said. “To address this growing market, Deribit has rolled out year-end XRP options.”

Market strategists often resort to straddles when a major event is looming with an unpredictable impact. Whether it’s earnings announcements, legal verdicts, or product breakthroughs, such events can shift prices drastically. A straddle allows traders to cover both scenarios—bullish or bearish—with minimal risk.

Particularly relevant to XRP’s current spike is the recent legal development involving Ripple. On the same day these block trades were placed, Ripple and the Securities and Exchange Commission agreed to withdraw their respective appeals in the Second Circuit court. This decision brings closure to one of the most closely watched crypto regulatory cases in recent years. Ripple, which utilizes XRP to facilitate fast and low-cost international transactions, is now free to proceed without the overarching legal uncertainty that has shadowed it since 2020.

Straddles: Risk-Managed Bets on Movement

The appeal of a long straddle lies in its symmetric risk-payout setup. The trader’s maximum exposure is limited to the premium paid to purchase both the call and put options. However, the profit potential is virtually limitless—if XRP’s price shoots dramatically up or falls sharply, the gain on one leg of the straddle can far outpace the initial cost.

To break even, XRP must move enough in either direction to cover the original premium investment. This makes straddles especially effective in times of anticipated market turbulence. Options themselves are a form of derivative that allow traders to hedge against future price directions. Call options protect against rising prices, while put options serve as a cushion against downturns.

Related: XRP Price: $12M Max Pain for Bears

With the conclusion of Ripple’s legal entanglement and a wave of increased interest in XRP derivatives, the outlook for XRP continues to evolve. Traders are clearly bracing for significant price action—whether up or down. What remains to be seen is whether XRP’s upcoming volatility will reward these carefully structured positions.