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World’s biggest onchain options trade is placed via Derive

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The world’s largest ever onchain options trade of $25 million in notional value was opened this month on Derive (October 12, 2024) by an institutional trader.

The $25 million options trade marks a watershed moment for onchain options trading, and it’s one that could have significant implications post-US election.

The institution has strategically positioned a unique structure with sold puts, bought calls, and eBTC collateral, potentially standing to make $1,020,000 on the structure if BTC hits $80,000 by November 29 – excluding any gains from the eBTC collateral. Collecting about $20,000 in premiums along the way, it highlights the tremendous upside that onchain options offer.

“What makes this trade especially unique is that it could only be executed on Derive, thanks to our deep liquidity and ability to collateralize with eBTC,” explained Nick Forster, Derive’s founder. “This is a prime example of how onchain options offer scalable, non-correlated yield for any onchain asset.”


What is notional volume?

Notional volume refers to the total value of the position in a derivative contract and is obtained by multiplying the number of contracts by the price of the asset.

When the institution entered the trade, they sold 100 of the Nov29 $50,000 puts, bought 100 of the Nov29 $70,000 calls, and sold 200 of the Nov29 $80,000 calls.

Together, these 400 contracts multiplied by the price of BTC generated $25 million of notional volume. The institution has locked up and risked $3 million in the strategy.

BTC has been on a strong bull run since early September and broke the 60k barrier in mid-September. Much of the buying sentiment is being driven by expectations in the market that a Trump victory in the election in the US will boost cryptocurrency markets.

What is the Derive DEX?

Derive was previously called Lyra and is a decentralised exchange or DEX, where transactions occur directly between traders. There are no banks, brokers or other intermediaries that stand in the way of a transaction. Key features include self-custody, transparency, borderless transactions and immutability. Users of a DEX control their own private keys, which means no centralized entity can access their funds or make trades on behalf of the user.

“While it remains non-consensus to be bullish with onchain options, we’re seeing traders leverage them in creative ways,” Forster added. “With narratives in crypto moving fast, the time to be early and capitalize on these opportunities in this space is running out.”

The Derive protocol is a permissionless protocol that settles perpetuals and option trades. The protocol is governed by the Derive DAO and DRV token holders.

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Hargreaves Lansdown IG Interactive Brokers Interactive Investor Charles Stanley
IG Interactive Brokers Charles Stanley

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