As the meme coin market heats up, traders have purchased $2 million worth of Dogecoin call options. This significant investment is seen as a bullish bet on Dogecoin, with the contract expiring in 16 days. For the option to be profitable, DOGE needs to rise by 31%.
Dogecoin last reached $0.22 in March but has not surpassed this level since November 2021. On Wednesday, a trader bought $2 million in Dogecoin (DOGE) call options at a $0.22 strike price, according to Bernd Sischka, chief commercial officer at derivatives exchange PowerTrade. Currently trading at $0.166, DOGE would need to increase by over 31% before the option expires on June 14 to avoid becoming worthless.
Options are derivative contracts allowing the buyer to purchase or sell an asset at a set price before the contract's expiration. If the underlying asset doesn't reach the strike price, the contract holds no value.
This trade follows a bullish day in the meme coin sector, highlighted by a sudden rise in Gamestop (GME) shares, a meme stock often correlated with meme coins. Despite reaching $0.22 in March, Dogecoin has not surpassed this price since November 2021.
Sischka noted that while altcoins have lagged behind Ethereum's recent rise, traders often speculate on altcoins following Ethereum's movements. He mentioned that the approval of an ETF boosted Ethereum's rally, but Dogecoin's potential wild card could be Elon Musk integrating it into Twitter as a payment currency.
Since hitting a low of $0.056 in October 2023, Dogecoin has surged over 195%, driven by the approval of a US spot Bitcoin ETF, which has fueled a crypto bull market.
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