Key Highlights
- Nasdaq wants to raise IBIT option limits from 250,000 to one million contracts.
- With these changes, IBIT will become a top-tier ETF, joining highly liquid global funds.
- FLEX IBIT options would have no limits, allowing large investors more flexibility.
Nasdaq ISE, LLC, has filed a proposal with the U.S. Securities and Exchange Commission (SEC) to raise the position and exercise limits for options on BlackRock’s iShares Bitcoin Trust ETF (IBIT).
The request, published today, seeks to increase the limits from 250,000 contracts per side to one million. Nasdaq said this change is needed as more big investors are interested in Bitcoin options, and the current limits are too small for large trades.
IBIT joins the top tier of ETFs
This change will put IBIT in the same top-tier category as some of the most liquid ETFs in the world, such as iShares MSCI Emerging Markets (EEM) and iShares China Large-Cap ETF (FXI). Nasdaq explained that the current 250,000-contract cap is stopping investors and market makers from trading as much as they want. With the new one million-contract limit, large players can hold more positions and trade more freely.
“The Exchange expects continued options volume growth in IBIT as opportunities for investors to participate in the options markets increase and evolve,” Nasdaq wrote in its filing. The ETF now has the largest Bitcoin options market by open interest, even more than competitors like Deribit.
Limits and FLEX options: What changes
The proposal includes raising the position and exercise limits to one million contracts. The filing noted that even if all one million contracts were exercised at the same time, it would represent just 7.5% of IBIT’s outstanding shares and only 0.284% of all Bitcoin in existence.
The exchange said such a scenario would have minimal impact on the broader Bitcoin market, and the larger limit aligns with rules for other ETFs of similar size and liquidity.
Additionally, Nasdaq plans to remove limits for physically settled FLEX IBIT options. These options are used by large funds to make special hedges or manage risk. FLEX contracts for IBIT will now work like commodity ETFs such as SPDR Gold Trust (GLD), which do not have limits.
Experts support the change
Industry observers welcomed the proposed changes. Eric Balchunas, senior ETF analyst at Bloomberg, said the change is a big deal for institutions.
In an X post, he said, “$IBIT is now the biggest bitcoin options market in the world by open interest.”
Jeff Park, head of alpha strategies at Bitwise Asset Management, said the previous 25,000- and 250,000-contract limits were too low and supported raising the cap to give more room to investors. The SEC is now accepting public comments on the proposed changes.
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