Nasdaq ISE filed a request with the SEC to increase position and exercise limits for options on the iShares Bitcoin Trust (IBIT) from 250.000 to 1.000.000, citing the product’s robust liquidity and institutional demand. The proposal also includes the removal of limits for physically settled FLEX options and sets a public comment period through December 17, 2025. The exchange frames the change as a response to growing institutional activity around BlackRock’s Bitcoin ETF options.
The filing with the SEC notes that IBIT exhibits a market capitalization of $86,2 mil M and an average daily volume of 44,6 M shares, figures Nasdaq uses to justify the limit expansion. The exchange calculates that, even if 1.000.000 contracts were exercised, this would amount to only 0,284% of the total Bitcoin supply, so it assesses systemic risk as marginal. In July 2025 the limit had already risen from 25.000 to 250.000 contracts, which according to the filing marks a trajectory of increasing trading capacity.
Analysts and managers cited in the documentation view the change as a step toward the institutionalization of Bitcoin. Eric Balchunas, senior ETF analyst, described the move as “a tipping point” that places Bitcoin on par with mega-cap assets. Jeff Park, head of Alpha strategies at Bitwise, said the prior limit was “too low” to absorb institutional demand. Other experts anticipate operational improvements: reduced spreads, deeper order books and greater ability to design structured products based on IBIT.
Market reactions and implications for traders and treasuries
For treasuries and risk managers, the removal of limits on physically settled FLEX options opens the possibility of moving trades previously conducted in OTC markets to a regulated and transparent environment, reducing counterparty risk. However, the increase also facilitates constructing very large hedging positions, which requires robust internal controls and liquidity planning to avoid forced executions in stress scenarios.
Operational impact for traders includes greater capacity for hedging strategies and income generation with options, but also the need to adapt risk models given the potential for greater position concentration. Derek Lim, head of research at Kaladan, noted that the effect on volatility would be gradual and dependent on the effective use of the new limits by large managers.
Nasdaq ISE’s request seeks to formalize greater institutional access by jumping to 1.000.000 contracts and removing FLEX limits, supported by IBIT’s volume and capitalization metrics.
