Nasdaq Pushes to Supercharge IBIT Options as Bitcoin Goes Mainstream

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Nasdaq ISE has asked the U.S. Securities and Exchange Commission (SEC) for approval to dramatically expand trading capacity for options tied to BlackRock’s iShares Bitcoin Trust (IBIT), a move that shows how quickly bitcoin-linked financial products are being absorbed into Wall Street’s core infrastructure.

The proposal, published this week in the Federal Register, would raise the position and exercise limits for IBIT options from 250,000 contracts per side to one million—placing bitcoin’s largest ETF in the same tier as major global equity benchmarks like the iShares MSCI Emerging Markets ETF (EEM) and iShares China Large-Cap ETF (FXI).

If approved, it would mark the most significant expansion of regulated bitcoin derivatives capacity in the U.S. since spot bitcoin ETFs launched in early 2024.

Also read: Texas Secures $5M in IBIT Shares in First Step Toward Bitcoin Reserve

ISE Cites “Strong and Accelerating” Options Demand

According to the filing, ISE said IBIT has recorded surging options activity throughout 2025. The current 250,000-contract cap is now constraining institutional traders, particularly market makers and funds that rely on high-volume options flows for hedging, basis trades and yield-enhancement strategies.

“The Exchange expects continued options volume growth in IBIT as opportunities for investors to participate in the options markets increase and evolve,” ISE wrote.

The exchange argued that its request is justified by IBIT’s scale, liquidity and rapid integration into institutional trading desks. IBIT has experienced consistent growth in assets and trading depth since launch, becoming the largest spot bitcoin ETF globally and one of the fastest-growing ETFs in U.S. history.

Filing: One Million Contracts Still Pose “Minimal Market Risk”

ISE included a quantitative analysis comparing IBIT to ETFs that already operate under one-million-contract limits. These include major emerging-market and China equity benchmarks widely used by global macro funds and institutional allocators.

The exchange noted that even if a trader held and fully exercised the entire proposed limit—one million contracts—the position would represent only about 7.5% of IBIT’s total float. More notably, the exposure would equal just 0.284% of all bitcoin in existence.

That scale, ISE argued, is too small to create systemic price distortions in the underlying bitcoin market, especially given bitcoin’s global liquidity profile and round-the-clock trading dynamics.

The filing also referenced IBIT’s increasing market depth relative to other ETFs with elevated options caps, further strengthening its argument that the product can safely accommodate expanded derivatives limits.

FLEX Options Could See Unlimited Limits

A second component of ISE’s proposal seeks to remove position and exercise limits entirely for physically settled FLEX IBIT options—customizable options contracts designed for large institutions.

That would bring IBIT’s FLEX options treatment in line with major commodity-based ETFs such as the SPDR Gold Trust (GLD), whose FLEX products already have no position limits.

FLEX contracts are heavily used by pensions, hedge funds, and insurance firms for bespoke hedges, structured exposures, and long-dated risk management trades. Removing limits would give these players significantly greater operational freedom when building bitcoin-linked strategies.

IBIT Surpasses Deribit in Options Open Interest

The timing of the proposal reflects a dramatic shift in where bitcoin options activity is consolidating. IBIT has recently overtaken Deribit—the long-time dominant offshore derivatives venue—as the largest platform for bitcoin options open interest.

Good catch.. new proposal to raise position limits on IBIT optons to 1 million contracts. They just raised the limit to 250,000 (from 25,000) in July. $IBIT is now the biggest bitcoin options market in the world by open interest. https://t.co/oxaUtP9Kyc
— Eric Balchunas (@EricBalchunas) November 26, 2025

That migration marks a key transition for the crypto derivatives market: a move from offshore, unregulated exchanges toward U.S.-regulated equity options markets.

The expansion proposed by ISE suggests that institutional demand may be accelerating even faster than regulators and exchanges initially anticipated when spot bitcoin ETFs were approved.

Also read: IBIT Turns Into BlackRock’s Biggest Moneymaker Yet, Nears $100B

SEC Opens Public Comment Period

The SEC is now inviting public comments on the proposed rule change before making a final determination. If approved, the expanded limits would take effect immediately.

The decision could become an inflection point for institutional bitcoin exposure, potentially unlocking new levels of liquidity, risk-management capability, and derivatives innovation tied directly to the largest U.S. spot bitcoin ETF.

For Wall Street, the message is clear: bitcoin options are no longer a fringe product—they are becoming a core part of the modern institutional toolkit.

Author

Steven Walgenbach

Steven's passion for cryptocurrency and blockchain technology began in 2014, inspiring him to immerse himself in the field. He notably secured a top 5 world ranking in robotics. While he initially pursued a computer science degree at the University of Texas at Arlington, he chose to pause his studies after two semesters to take a more hands-on approach in advancing cryptocurrency technology. During this period, he actively worked on multiple patents related to cryptocurrency and blockchain. Additionally, Steven has explored various areas of the financial sector, including banking and financial markets, developing prototypes such as fully autonomous trading bots and intuitive interfaces that streamline blockchain integration, among other innovations.

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