Leading OTC liquidity provider Paradigm has introduced block trading for linear altcoin options on the Deribit derivatives exchange. This new service enables clients to trade options on popular altcoins such as Polygon (MATIC), Solana (SOL), and Ripple (XRP). Block trades are typically large, privately negotiated deals that exceed certain volume thresholds, reducing slippage and minimizing impact on market prices. This development marks a significant advancement in the cryptocurrency derivatives market.
First Block Trade Completed Successfully
The inaugural transaction under this new offering involved MATIC call options between QCP Capital and Galaxy Digital, with an expiration date of May 31. The deal included a spread of 500,000 MATIC calls with strike prices of $0.80 and $0.95. This transaction highlights the rising interest and demand for altcoin derivatives among institutional investors. MATIC, the main asset of the Polygon Network, is used for staking and paying gas fees, and its inclusion in these options further solidifies its role in the broader cryptocurrency ecosystem.
What Are Options and How Do They Work?
For those unfamiliar, options are derivative contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price before a specified expiration date. Call options grant the right to buy, while put options give the right to sell. Paradigm’s block trading feature on Deribit is designed to facilitate such transactions, offering payouts directly tied to the price movements of the underlying assets. This is particularly attractive to investors looking to hedge against price movements or speculate without directly buying or selling altcoins.
Key Benefits for Institutional Investors
This innovative service by Paradigm comes with several advantages:
- Allows trading of large volumes with reduced market impact.
- Offers a way to engage with altcoin price movements without direct asset ownership.
- Enables precise hedging and speculative strategies for institutional portfolios.
- Facilitates complex trades that are negotiated privately, ensuring confidentiality.
Paradigm has become a preferred platform for institutional investors seeking to execute large block trades since its inception in 2016. To date, the platform has recorded approximately $400 billion in trading volume and as of May, accounts for 17% of cumulative Bitcoin and Ethereum options trades on Deribit. This substantial market share underscores Paradigm’s significance in the crypto derivatives market and its role in facilitating large, complex trades for institutional clients.
Deribit CEO Luuk Strijers expressed excitement about the expansion of Paradigm’s block trading services to include linear altcoin options. He noted that the successful launch of MATIC options trading is just the beginning, with plans to offer block trading for SOL and XRP options in the near future. This expansion not only broadens Deribit’s offerings but also enhances trading capabilities for institutional investors looking to diversify their portfolios with altcoin derivatives.
