Nasdaq has filed to eliminate position and exercise limits for options on spot Bitcoin and Ethereum ETFs, effective immediately. The rule change, detailed in a filing with the Securities and Exchange Commission (SEC) on Wednesday, removes the 25,000-contract cap that previously throttled institutional activity across major products including BlackRock’s IBIT and Fidelity’s FBTC.
The End of the "Training Wheels"
The SEC waived the standard 30-day operative delay, allowing the new rules to take effect instantly. Previously, traders were restricted to 25,000 contracts (representing 2.5 million shares) on the same side of the market, a ceiling that forced large desks to fragment orders or move to over-the-counter (OTC) derivatives.
Under the new framework, these options will trade under standard position limits, aligning crypto ETFs with traditional equity products. The filing explicitly cites the need to "prevent unfair discrimination" and allow market makers to hedge risk without artificial constraints. The change applies to the full roster of approved spot ETFs, including:
- Bitcoin: BlackRock (IBIT), Fidelity (FBTC), Grayscale (GBTC/BTC), Bitwise (BITB), ARK/21Shares (ARKB), and VanEck (HODL).
- Ethereum: BlackRock (ETHA), Fidelity (FETH), Bitwise (ETHW), and Grayscale (ETHE/ETH).
The removal of the current constraint… will increase IBIT’s liquidity. The Exchange believes that the additional liquidity will serve as a deterrent to potential manipulation.
Institutional Context
This regulatory unlock removes a primary friction point for macro hedge funds and pension desks, which require deep liquidity to execute size without slippage. By lifting the cap, Nasdaq effectively invites the heavyweights to deploy sophisticated hedging strategies, collars, straddles, and volatility arbitrages, that were previously impractical on-exchange due to size limitations.
The timing aligns with high demand. BlackRock’s IBIT has already surged into the top 10 U.S. options by open interest, despite the previous handicaps. Following the news, Bitcoin held steady at $89,700, while Ethereum traded up 1.5% to $2,990, as the market digested the structural upgrade.
