Bitcoin ETF Options About to Get 4x Bigger Under Nasdaq Plan

TLDR

• Nasdaq ISE filed with the SEC to increase position limits for BlackRock’s IBIT Bitcoin ETF options from 250,000 to 1 million contracts
• The proposed increase would place IBIT in the same tier as major ETFs like Apple and Microsoft
• Current limits are restricting market makers and institutional traders who use options for hedging strategies
• IBIT has become the largest venue for Bitcoin options open interest, surpassing Deribit
• Even at 1 million contracts, this would represent only 0.284% of all Bitcoin in existence

Nasdaq ISE has submitted a proposal to the Securities and Exchange Commission requesting an increase in position limits for options on BlackRock’s iShares Bitcoin Trust ETF. The exchange wants to raise the limit from 250,000 contracts to 1 million contracts per side.

The filing was submitted on Nov. 13 and appeared in the Federal Register on Nov. 26. Position limits exist to prevent single investors from controlling too many option contracts on the same security.

The proposed increase would place IBIT in the same category as major ETFs such as iShares MSCI Emerging Markets and iShares China Large-Cap ETF. These funds already support position limits of 1 million contracts.

Nasdaq ISE said the current 250,000 contract limit is restricting trading activity. Market makers and institutional desks that rely on options for hedging and yield strategies are being constrained by the existing ceiling.

The exchange cited strong and growing options volume for IBIT throughout 2025 as justification for the increase. IBIT has posted accelerating trading activity since options on the ETF launched earlier this year.

The filing includes detailed comparisons of IBIT’s market capitalization, average daily volume, and liquidity to other ETFs. These metrics show IBIT has similar or better characteristics than funds that already have higher position limits.

Market Impact Analysis

Vincent Liu, chief investment officer at Kronos Research, told Cointelegraph the SEC is likely to approve the proposal. He said these adjustments are routine once an asset proves it can handle real trading volume.

Liu expects the approval to result in thicker order books and tighter spreads. He said more depth and cleaner markets typically follow when position constraints are removed.

The exchange previously increased IBIT’s position limits from 25,000 to 250,000 contracts in January 2025. That increase came after IBIT exceeded the required trading volume minimum of 100 million shares.

Adam Livingston, a Bitcoin analyst, said the move places BlackRock’s Bitcoin ETF alongside the largest and most liquid equities on Earth. He compared IBIT’s new status to tech giants like Apple and Microsoft.

Physical Settlement Option Changes

The proposal includes a second component regarding FLEX options. Nasdaq ISE wants to remove position and exercise limits for physically settled FLEX IBIT options.

FLEX contracts allow large funds to create custom hedges and structured exposures. The exchange wants to align these contracts with commodity-based ETFs like SPDR Gold Trust, which have no position limits on FLEX options.

The filing argues that even a fully exercised 1 million contract position would represent about 7.5% of IBIT’s float. This would equal only 0.284% of all Bitcoin in existence.

Nasdaq ISE said this scale poses minimal risk of market disruption. The ETF’s creation and redemption process provides additional safeguards against manipulation attempts.

IBIT has become the largest venue for Bitcoin options open interest, surpassing crypto exchange Deribit. The SEC is now soliciting public comment on the proposed rule change.

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