In brief
- The proposal seeks to raise IBIT option limits from 250,000 to 1,000,000 contracts, with no cap on physically delivered FLEX options.
- Exchange cites IBIT’s scale and liquidity as justification, noting demand from institutions and market makers.
- Analysts say the change would support larger, lower-risk allocation strategies and could compress volatility over the next year.
Nasdaq’s International Securities Exchange has filed a proposal with the U.S. Securities and Exchange Commission to increase position limits on options for BlackRock’s iShares Bitcoin Trust.
The filing, dated November 21, 2025, seeks to raise the limit from 250,000 contracts to 1,000,000 contracts. It would place IBIT options in the same tier as major equities and ETFs such as Apple, NVIDIA, and the SPDR S&P 500 ETF.
“The proposed rule change seeks to dramatically increase the position and exercise limits for options on the iShares Bitcoin Trust (IBIT) from 250,000 to 1,000,000 contracts,” the filing reads, adding the current cap is “restrictive and hampers legitimate trading and hedging strategies.”
A higher limit would allow institutional traders and market makers to establish larger positions, thereby increasing market depth and liquidity for the product.
“This will allow institutions to build more interesting structured products for IBIT, increasing the total possible amount of capital that can be allocated to the Bitcoin ETFs,” Lai Yuen, investment analyst at Fisher8 Capital, told Decrypt. “This should be good for long-term IBIT flows.”
“This is already the second time Nasdaq has requested an increase in IBIT’s options position limits,” Tim Sun, Senior Researcher at HashKey Group, told Decrypt.
The move showcases that institutional demand for Bitcoin derivatives continues to expand as larger players seek to increase their Bitcoin allocations, Sun added.
The filing requests an exemption to eliminate limits entirely for customized ‘FLEX’ options that are physically delivered. This move would “align IBIT with other major commodity-based ETFs and help pull trading activity away from opaque over-the-counter markets,” per the filing.
It also cites IBIT’s market capitalization of $86.2 billion and an average daily volume of 44.6 million shares as of September 22, 2025, as key factors supporting the proposed change.
The ISE proposal is subject to SEC approval, with a public comment period open until December 17, 2025.
“IBIT is now the biggest bitcoin options market in the world by open interest,” Eric Balchunas, Senior ETF Analyst at Bloomberg, wrote in a Wednesday tweet.
“At last, IBIT options is finally getting the treatment it deserves. Institutional vol is finally here,” Jeff Park of Bitwise Invest Advisors tweeted on Wednesday.
Assessing the market impact
The scale of this change is “more modest than most headlines suggest,” Derek Lim, head of research at crypto market-making firm Caladan, told Decrypt.
With BlackRock holding over $71 billion in Bitcoin, the increased options limit would allow roughly $5.3 billion, representing about 8% of that total value, which is a standard, conservative practice for large ETFs,” Lim added.
While the changes have yet to take effect, the adjustment signals that Bitcoin trading is shifting from purely speculative to allocation-driven behavior, the HashKey analyst noted.
Despite no immediate impact on Bitcoin’s short-term price, Sun explained it would allow institutions to build Bitcoin positions in a “lower-risk and more controlled manner.”
From a volatility standpoint, Lim noted that realized volatility is likely to compress 50 to 100 basis points over the next six to 18 months, which “can translate to marginally higher prices through lower risk premia.”
Bitcoin’s rally from $70,000 to $110,000 earlier this year occurred amid declining volatility.
That negative correlation marks a fundamental shift, Lim noted, suggesting that if the Nasdaq’s proposed changes come into effect, Bitcoin will increasingly trade like a macro asset and would accelerate this transition.
In a related development, BlackRock continues to accumulate Bitcoin exposure in its in-house funds. A separate Wednesday filing revealed its Strategic Income Opportunities Portfolio increased its IBIT holdings by 14% in Q3 to $155.8 million.
Bitcoin hit $91,500 on Wednesday and is up 5% over 24 hours, according to CoinGecko data.
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