An unknown trader has purchased 2 million Dogecoin (DOGE) call options, betting big on the world’s largest meme coin by market capitalization. According to Bernd Sischka, the chief commercial officer at derivatives exchange platform PowerTrade, the trader bought the call options at a strike price of $0.22. At the time of the purchase, DOGE was trading at $0.166 and has fallen a little to the current $0.159, according to CoinMarketCap data.
The call options purchased expire on June 14. This means that DOGE must rise by at least 31% for the trade to earn the buyer any profits. Unfortunately, the funds invested will be worth nothing if DOGE does not rise to $0.22 by the date.
This bullish bet on DOGE indicates a strong conviction in meme coins. Since last year, a few meme coins have returned considerable profits to investors. Several top Solana meme coins, including Dogwifhat (WIF), Bonk (BONK), and Book of Meme (BOME), have also proved to be worthy investments. The crypto market is still welcoming new meme coins on various blockchains.
Another reason the trader’s purchase is interesting is that DOGE has not seen the $0.22 mark since March. Before then, the last time was November 2021, indicating that the call options purchase is quite a bet. Interestingly, DOGE fell to $0.056 last October but has since spiked more than 196%.
Call options are derivative contracts that let the holder buy or sell an asset at a predetermined strike price before the contract’s expiration. The buyer easily makes a profit if the asset hits the expected price before the contract expires. If the asset does not hit the strike price, the entire investment is lost.
The attention meme coins are getting could allow them to enjoy actual utility if adoption increases. Although high levels of adoption are more common among cryptocurrencies that offer utility on several platforms for payments, remittances, and even entertainment on online gambling platforms, meme coins also have a chance.
For instance, while Bitcoin (BTC) has lost 1.07% in 24 hours and 1.82% over the last week, meme coin Shiba Inu (SHIB) has gained 5% in 7 days. There’s also Pepe (PEPE), recording an impressive 11.5% in the same period, with WIF rising more than 16%.
Meme coins are generally known for their high volatility. A major example is WIF, which crashed to $3.37 after losing 10% in 24 hours. Current data shows a slightly lower reduction to $3.32. The price movement is noteworthy because CoinMarketCap data indicates that the WIF fell to $2.9 on May 27, dropping below its support level. Reactions to WIF’s trajectory have been mixed, as some traders sound a note of caution while others are optimistic.
Another popular meme coin, MAGA (TRUMP), also plunged, losing 16% shortly after former President Donald Trump was found guilty of 34 felony counts related to tampering with business records. Trump was indicted for hiding a payment made to adult entertainment star Stormy Daniels. When the news broke, the TRUMP token fell to $11.27 from $13.48, and it lost over $130 million of its market capitalization. However, the token has recovered and is trading at $16.3.
