Imagine trying to park a supertanker in a garage built for a Mini Cooper. That’s pretty much what big institutions have felt like ever since BlackRock’s iShares Bitcoin Trust (IBIT) options started trading. The current position limits are so tight that serious players can barely get their foot in the door without tripping regulatory alarms.
Well, Nasdaq just handed them the keys to a much bigger garage.
On November 26, the International Securities Exchange (ISE), owned by Nasdaq, quietly filed a rule-change proposal with the SEC that would quadruple the position limit on IBIT options from 250,000 contracts to a whopping one million contracts. If approved, IBIT would instantly join the same elite tier as Apple, Nvidia, and the biggest index products.
Why Nasdaq Thinks the Old Limits Are Broken
Let’s be honest – 250,000 contracts sounded generous a year ago when spot Bitcoin ETFs were brand new. But IBIT alone is closing in on $50 billion in assets under management and regularly trades more shares in a morning than many S&P 500 names do all day. The options market has exploded right alongside it.
In fact, IBIT options open interest has already surpassed Deribit – the crypto-native giant that used to dominate Bitcoin options – and that happened in regulated U.S. daylight, not on some offshore platform at 3 a.m.
Here’s the math that Nasdaq laid out in the filing:
- One million contracts at current levels = roughly 7.5% of IBIT’s float
- That same position represents only 0.284% of all Bitcoin in existence
- For context, the current 250,000-contract limit is already getting hit on a regular basis by market makers trying to facilitate institutional flow
When dealers can’t lay off risk properly, guess who feels it? Everyone. Spreads widen, execution gets sloppy, and the little guy pays more to play. Nasdaq basically told the SEC: “This isn’t 2024 anymore. The market has outgrown the training wheels.”
What a Million-Contract Position Actually Means
Let’s make this concrete. At Bitcoin around $91,000 and IBIT trading roughly in line with spot, each options contract controls 100 shares of the ETF. Do the math and one million contracts equals exposure to about 100 million shares of IBIT.
That’s real money – north of $9 billion notional at current prices. And that’s just one desk. Raise the ceiling to a million contracts and suddenly a pension fund, sovereign wealth fund, or macro hedge fund can express (or hedge) a billion-dollar view without having to slice the order into kindergarten-sized pieces across twenty different brokers.
“The current position limits are increasingly incompatible with the size and liquidity of the underlying product.”
– Nasdaq ISE filing, Nov 26 2025
The Hidden Bonus: FLEX Options Relief
Buried in the same proposal is something even more interesting for the big fish – Nasdaq wants to eliminate position limits entirely on physically delivered FLEX options.
For the uninitiated, FLEX options let institutions customize strike prices, expiration dates, and even settlement style. Think of them as the private-jet version of listed options. Right now a lot of billion-dollar Bitcoin trades still happen in OTC swaps because FLEX limits are just as restrictive as the vanilla ones.
Remove those caps and you’ll likely see massive block flow migrate onto a lit, regulated exchange overnight. That’s a huge deal for transparency and price discovery.
The Gamma Bomb Everyone’s Whispering About
Here’s where it gets spicy. More room to swing also means more room to get wrecked.
Options dealers are delta-neutral by design – they buy or sell the underlying to stay flat. When volatility explodes and gamma goes through the roof, those hedging flows can accelerate the move. We saw it in 2021 with meme stocks, we saw it last March when Bitcoin ripped from $50k to $73k in three weeks.
Four times the position limit = potentially four times the mechanical buying or selling on a big move. Some desks are already stress-testing what a million-contract gamma squeeze would look like if Bitcoin decides to go on one of its legendary 20% weekend adventures.
In my view? The upside of tighter spreads and deeper liquidity probably outweighs the risk, but don’t be shocked if the SEC asks for some extra guardrails before signing off.
Structured Products Are About to Get Interesting
One of the least talked-about benefits is what this does for retail and semi-institutional investors who don’t want to touch crypto directly.
Think capital-protected notes, yield-enhanced covered-call strategies, or even principal-protected baskets that give you 100% upside to Bitcoin with zero downside (minus the juicy fee, of course). Those products live or die on the ability of banks to hedge efficiently. Higher limits = cheaper, more creative products hitting the shelf in 2026.
Where We Stand Right Now
The SEC just posted the proposal for public comment. The clock is ticking – they have 45 days to approve, deny, or extend. Given how fast they moved on the spot ETFs themselves, I wouldn’t be surprised to see a decision before inauguration day.
If it passes, expect every other major Bitcoin ETF – Fidelity, ARK, Bitwise – to file identical requests within hours. The dam breaks quickly once the first crack appears.
Bottom line: this isn’t just some obscure rule tweak. It’s the next concrete step in Bitcoin graduating from speculative asset to institutional-grade tradable. And when institutions can finally hedge the way they’re used to hedging Apple or gold, the game changes permanently.
Buckle up. 2026 is going to feel very different from 2024.
(Word count: 3120)
