Bitcoin ETF Options Now Trade Like Gold and Silver as the Last Cap Falls

For a while, Bitcoin ETF options felt like they were playing a slightly different game. Even though the demand was there and the volumes showed it, the rules did not catch up yet. This gap has finally closed. With the last set of limits now gone, Bitcoin ETF derivatives are stepping into the same arena as gold and silver. The latest change will redefine how big money can move.

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IBIT Generated $1.9B on Day One With the Cap — Now the Cap Is Gone

The latest shift came through subtly. NYSE Arca and NYSE American have removed the 25,000-contract crypto ETF options cap. This was after the SEC signed off and waived the usual waiting period. This makes them the final major exchanges to fall in line with the rest of the market. The firm has also been working towards bringing the stock market into blockchain.

It should be noted that this is more than just a technical tweak. Position limits can now run well past 250,000 contracts. But it depends on how liquid the product is. In addition, these options can now trade as FLEX contracts. This means that institutions can shape them however they want. Striking prices, expiries are all adjustable. This sort of flexibility has been standard for years in commodity ETFs.

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What makes this more interesting is that demand never really needed permission. When IBIT options trading went live, it clocked about $1.9 billion in notional exposure on day one. This was with the cap still in place. Bloomberg’s Eric Balchunas pointed out at the time that while it did not match something like GLD’s $5 billion day, it wasn’t far off considering the limitations.

$1.9b is unheard of for Day One. For context, $BITO did $363m and that's been around for four years. And also this is with 25,000 contract position limits. That said, $1.9b isn't quite big dog level yet tho, eg $GLD did $5b today, but give it a few more days/weeks. https://t.co/nAr2rracjb

— Eric Balchunas (@EricBalchunas) November 19, 2024

For institutional desks, this removes one of the last friction points. Hedging gets cleaner, and larger positions don’t have to be broken up. Earlier this month, Morgan Stanley had expressed interest in Bitcoin ETFs. The NYSE’s Bitcoin ETF market is starting to function like any other established asset class.

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