Contrary to what casual observers might believe, the Cboe and CME weren’t the first exchanges to offer trading and clearing of bitcoin derivatives in the US - that distinction belongs to a relatively obscure company called LedgerX, which received permission from the CFTC over the summer to create the first swap execution facility - or SEF - allowing it to clear trades of bitcoin-focused options.

While trading volume on LedgerX’s platform has been relatively subdued compared with its larger peers (during its first week of trading, LedgerX recorded a meager $1 million in trading volume) some traders are using its platform to place massive bets on out-of-the-money options.

According to data released by LedgerX on Wednesday, one anonymous trader bought $1 million in options that will only pay off if the price of a single bitcoin surges above $50,000 next year...

Here’s WSJ with more:

Daily trading records released on Wednesday by LedgerX, a startup electronic market for bitcoin derivatives, show that an unidentified trader or traders entered the bullish bets using bitcoin call options that expire next December. Just under $1 million was paid for the options in one or more trades, the records show. It is unclear from LedgerX's data who the buyer or buyers were.

Of course, if bitcoin even comes close to matching this year’s torrid rally in terms of percentage-point gains, this trade could be astonishingly lucrative.

But if the bitcoin price tanks - as many prominent figures in the financial services industry believe it will - well, the most the buyer can lose is his initial $1 million investment...

...To the average investor, $1 million might sound like a lot of money. But in the cryptoverse - where tens of billions of dollars in market cap can vaporize in an instant - $1 million is chump change.