A large bitcoin (BTC) options trade executed on Deribit early Wednesday anticipates a shift from the present low volatility regime to a period of heightened price swings, potentially exceeding the $53,000-$87,000 range.

The trade, a so-called long straddle, saw the entity pay a net premium of over $1 million to purchase 100 contracts of the $66,000 strike call and put options expiring on Nov. 29, according to data confirmed by Lin Chen, head of business development Asia at Deribit.

A long straddle is preferred when the market is expected to move far enough in either direction to make the call or the put option worth more than the cumulative premium paid. A call option protects the buyer against price rallies and gains value as the underlying asset's price rises. A put works the other way around, gaining value as prices drop.

"When discussing strangles, straddles, and ratioed straddle strategies, it is necessary to understand the buying and selling of 'premium' [options contracts]," options trader Charles M. Cottle wrote in his book "Options Trading: The Hidden Reality." "Sellers of premium want the market to sit still, and buyers of premium [straddle/strangle buyers] want the market to move."

For the strategy to turn profitable and overcompensate for the premium paid, the bitcoin price needs to move either above $87,000 or below $53,000 by the end of November, Chen told CoinDesk.

In other words, it is a bet on volatility explosion beyond the $53,000-$87,000 range. The trade will bleed money if the price remains between those levels till the end of November, with the maximum loss being the $1 million premium paid.

Chen said that November expiry options are seeing above-normal activity, likely in anticipation of a potential post-U.S. election volatility. The U.S. presidential election is due Nov. 5, with results to be declared on Nov. 8. Some traders have recently set up bets on continued range play ahead of the elections.

"We have over $1.4 billion open interest in BTC's end-of-November expiry and a put-call ratio of 0.66, which is notably higher than usual. In comparison, the December put-call ratio is 0.39," Chen told CoinDesk. "We are definitely seeing more hedging flow around the U.S. election."

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