Very young octopuses are much harder (except for O. briareus) to ID than the adults. They are also VERY timid until somewhere around 4 months old (IME) so the behavior is not a giveaway. I'm afraid I am not going to be of much definitive help but I will tell you what I see, direct you to a couple of journals and articles and take a shot at guessing.
O. mercatoris, Caribbean dwarf: The eyestalks appear to be separate and not short and close to the mantle and the arms appear to be quite thin and about 1.5 times the mantle length. Anecdotally, O. mercatoris love giant barnacle clusters, especially placed about 1/3 of the way up from the aquarium floor. This would lead me to think you are right about it being a dwarf and likely O. mercatoris BUT the color is not right for a merc. Mercs are a reddish brown or white or speckled with red and white. The photo shows sort of a tan color and not one that is in the color patterning of the mercs and I am going to guess this is NOT O. merctoris.
O. joubini. It is said that they look very much like a young O. vulgaris but I have never seen one. There is a good chance
Sedna kept one a couple of year ago . There is a good paper on them
here.
O. vulgaris has a close eyestalk but CAN extend the eyes to make the stalks appear longer and this little one is hanging and not at rest so that may discount the eye look. Their eye sockets appear sort of squared off and I see this in the left eye of the bottom picture. Coloration is well within the range for a vulgaris but the arms look short and you can usually see webbing on the vulgaris that extends to the arm tip but often only visible near the top of the web.
Up until this week, I have only had one O. vulgaris and
LittleBit started out very small so you might look at her journal. I took a long time making a definite call on her species because she grew VERY slowly and I was fairly sure she was O. joubini. She lived in a 37 gallon tank for
7 MONTHS. After FINALLY outgrowing the 37 and moving her to a 60, she did grow much more rapidly than when she was younger but she never got larger than an O. briareus.
Sooo, I will venture a gues of EITHER O. joubini or O. vulgaris
I also will make some suggestions that might help you see it more often:
1. Remove ANY fish and don't put any more in the tank, regardless of size. Fish are not particularly good food and do not constitute much of their diet. Attempts at raising octopuses on fish have shown poor growth and high mortality (
at least two studies that were done trying to find a cheap food to raise octopuses as a food source).
2. Remove ANY fish and don't put any more in the tank (intentional redundancy). Fish pester octopuses, I have personally seen this with a wrasse in the wild, noted it in many videos and we have a
great article by CapFish that is recommended reading for anyone who insists their octopus "gets along" with their fish. In the open ocean octos can escape the pestering but even there they may kill the fish to eliminate the pest if it won't stop picking on it. There is concern for the eyes but any place a fish picks can leave a cut that is
susceptible to infection. I also believe your animal will learn to be less afraid of its environment if there are no perceived threats.
3. Place the discovered den about 1/3 of the way up the aquarium stably embedded in the rock work and facing out toward the front of the tank. Hopefully, it will return to this set of shells. For animals that like the barnacle collection, this seems to work quite well as you will be able to find them but they still have confidence in their den.
4. Attempt to feed dead food by hand instead of live food for it to hunt in the tank. Arrange a daily time for your attempts and allow yourself 1/2 hour every day, regardless of the outcome. I recommend trying around 7:00 PM but anytime after/before the sun is up should work as long as it is consistent. Use a feeding stick and a piece of thawed, shell on shrimp (once it starts taking the shrimp easily you can remove the shell before offering it but sometimes the shell makes a tactical difference but the octo will not eat it). Bamboo skewers work well but a standard feeding stick is just as acceptable. If you have access to shore shrimp, this is often a good starting food but store bought shrimp is very often accepted. Initially, you may only see an arm coming out to grab the bait but eventually, it will expect food and be waiting. Expect the animal to want the stick
in addition to the food once it starts accepting the food. You will find O. vulgaris to be very strong even when very young. It is the only species that has left sucker marks on my hands. I would also recommend small crabs for live food once or twice a week. Fiddlers are the most commonly used but any crab smaller than the mantle with disabled claws is a good choice. You can disable the claw by breaking the top or bottom section (only the large claw on the fiddler needs to be disabled) so that it can't puncture. The crab may throw the claw so be sure you are holding it by something else. Don't feed the dismembered claw as it is not worth the clean up and usually gets ignored if not attached to the crab. Snails and hermits may or may not be eaten. They will happily take shelled hermits if you can remove them from the shell but this is quite a challenge.
5. Keep a red light on over the tank all night (I just leave mine on 24/7) and turn the normal tank light off somewhere around 9:00 PM (you can extend this later). The purpose of the red light is to never fully darken the tank (they don't see red but will detect the lighting somewhat). This will let you see some of what goes on without being a stressor to the octopus. O. joubini is nocturnal and O. vulgaris is crepuscular (hunting early AM and early PM). O. joubini will not likely be active during the day but we often see active O. vulgaris after they are adults.
Good luck with this little one. I hope you will continue to journal the experience.