XRP Price Skyrockets: Derivatives Trading Volume Explodes as Traders Chase the Rally

XRP's sudden price surge has sent shockwaves through crypto markets—and derivatives traders are piling in like Wall Street bankers at a free-lunch buffet.

Futures and options volume spikes as FOMO kicks in

The token's double-digit percentage gains triggered a domino effect: leveraged positions ballooned while perpetual swap funding rates turned positive (for once). Meanwhile, OI across major exchanges hit levels not seen since the last 'altseason.'

Retail traders aren't the only ones chasing momentum—institutional players appear to be testing the waters too, though whether that's smart money or just dumb money in suits remains unclear.

One thing's certain: when XRP moves, the casino... sorry, 'markets'... get volatile. Buckle up.

What Is a Long Straddle?

A long straddle involves buying both a call and a put option at the same strike price and expiry. In this case, the first major trade involved purchasing 100,000 contracts each of XRP calls and puts at the $3.20 strike, with an expiry on August 29. The total cost of the trade was over $416,000 in premiums.

A second similar trade was seen at the $3.10 strike price. These large trades are typically done over-the-counter (OTC) to minimize market disruption and often signal institutional positioning.

The strategy is designed to profit from big moves in either direction. It’s not about predicting whether the asset will go up or down, but that it will MOVE significantly. Traders using this approach are likely anticipating a major event that could drive XRP’s price sharply in one direction.

Legal Clarity Boosts Sentiment

Adding fuel to the rally, Ripple and the U.S. Securities and Exchange Commission (SEC) reached an agreement on Thursday to withdraw their appeals in a long-running legal case. This agreement effectively ends years of courtroom uncertainty that has hovered over XRP and its parent company, Ripple Labs.

The legal clarity likely contributed to the growing confidence among traders and institutions who are now more willing to bet on XRP’s next big move. Ripple continues to use XRP as part of its cross-border payments system, and the resolution of its regulatory battle may pave the way for broader adoption.

Institutions Showing Strong Interest

According to Lin Chen, Asia Business Head at Deribit, institutional appetite for XRP is rising fast. “We’re seeing a significant increase in block trades and interest in XRP options. XRP has outperformed bitcoin this year, and the demand for complex strategies like straddles is growing,” Chen said.

To meet this demand, Deribit has even introduced year-end XRP options, giving investors more tools to express their views on the asset’s long-term volatility.

Risk and Reward of the XRP Straddle Strategy

The XRP straddle strategy offers an interesting risk-reward profile. The maximum loss is capped at the total premium paid for the options. However, the potential profit is unlimited, as the price could move sharply in either direction.

To break even, XRP needs to move by an amount equal to or greater than the total premium. If that happens, the strategy becomes profitable — and if XRP moves much further, profits can be significant.

This approach is often used when a trader believes something big is about to happen but isn’t sure whether the outcome will be positive or negative. In XRP’s case, the legal resolution and rising institutional interest may be setting the stage for such a move.

Options Signal Volatility Ahead

Options are financial contracts that give the buyer the right — but not the obligation — to buy (call) or sell (put) an asset at a specific price before a set expiry date. A straddle combines both types of options to create a bet purely on price movement, not direction.

In recent days, the XRP options market has been buzzing with activity. The use of straddles reflects trader expectations that XRP is about to enter a highly volatile phase. Whether that leads to a breakout above current levels or a pullback remains uncertain — but what is clear is that volatility is back.

Final Thoughts

With XRP up 12% in a day and major straddle positions building up, traders and institutions alike appear to be bracing for big price swings. The end of the Ripple-SEC legal battle removes a cloud that’s long hung over the token, giving investors more room to bet on its future.

Whether XRP continues its upward momentum or retraces will depend on how market sentiment evolves in the coming weeks. But one thing’s for sure — the XRP straddle strategy has brought fresh energy to the token’s market, signaling that the quiet days may be over.