The biggest-ever bet on Bitcoin options is about to expire worthless.

Purchased for almost US$1 million on LedgerX’s trading platform just days after Bitcoin peaked a year ago, the call options have a strike price of $50,000 and an expiry date of Dec. 28, 2018. For the contracts to retain any value at expiry, Bitcoin would need to rally more than 1,200 per cent.

The options’ almost certain wipeout is a less-than-ideal outcome for the buyer, but it may not be quite as bad as it seems.

Ari Paul, a cryptocurrency fund manager at BlockTower Capital, has indicated that he bought the options while simultaneously selling some of his fund’s Bitcoin holdings. In a December 2017 interview with CNBC, Paul said the trade allowed him to lock-in some profit, reduce exposure to market declines and potentially earn a big payout if Bitcoin soared above $50,000.

When the options were purchased, causing a stir in crypto circles, Bitcoin was trading at about US$16,200. The virtual currency has since tumbled to US$3,800, mired in one of the worst bear markets since its inception a decade ago.

“These calls let me capture upside while reducing my downside risk,” Paul told CNBC. He later tweeted that the trade -- selling some of his Bitcoin holdings while buying the call options -- was profitable.

Paul, a former portfolio manager at the University of Chicago endowment, didn’t disclose the performance of his entire fund. BlockTower declined to comment.

LedgerX, the first U.S.-regulated Bitcoin options exchange, declined to identify the buyer or seller of the calls but confirmed that the position, which has a notional value of US$13.75 million, remains the biggest Bitcoin options trade to cross its platform.

--With assistance from Cecile Vannucci