NYSE Exchanges Remove 25,000-Contract Options Cap on 11 Bitcoin and Ether ETFs

NYSE Arca and NYSE American have removed the 25,000-contract position and exercise limits on options tied to 11 spot Bitcoin and Ether exchange-traded funds (ETFs), with the rule changes filed on March 10, 2026, becoming immediately effective after the Securities and Exchange Commission (SEC) waived the standard 30-day waiting period.

The elimination of the cap, originally imposed as a precautionary measure when crypto ETF options began trading in November 2024, now treats these products identically to other commodity-based ETF options across all major U.S. exchanges. The changes also allow crypto ETF options to trade as FLEX options, enabling customizable contract terms including non-standard strike prices, expiration dates, and exercise styles.

The affected ETFs include BlackRock’s iShares Bitcoin Trust (IBIT), Fidelity’s Wise Origin Bitcoin Fund (FBTC), ARK 21Shares Bitcoin ETF (ARKB), Grayscale’s Bitcoin and Ethereum trusts, and Bitwise’s Bitcoin and Ethereum ETFs.

Regulatory Approval and Implementation

SEC Waiver and Effective Date

The SEC acknowledged both sets of proposed rule changes on March 15, 2026, waiving the standard 30-day waiting period for each filing. The rules are now operative, completing a transition that began earlier this year when Nasdaq ISE, Nasdaq PHLX, MIAX, MEMX, and Cboe each filed similar amendments to lift the restrictions on crypto ETF options.

The SEC noted in its approval that the proposals do not introduce novel regulatory issues, pointing to the identical changes already in effect at rival exchanges.

Previous Position Limit Context

The 25,000-contract cap was implemented when crypto ETF options first began trading in November 2024 as a conservative measure to prevent market manipulation and excessive volatility. At the time, Bloomberg senior ETF analyst Eric Balchunas noted that IBIT generated nearly $1.9 billion in notional exposure on its first day of options trading despite the constraint.

In October 2024, Kbit CEO Ed Tolson characterized the cap as not overly restrictive given the approximately $40 billion in Bitcoin open interest across futures and perpetual swaps. However, the limit was notably out of step with how other commodity ETF options were treated, prompting exchanges to pursue removal.

New Position Limit Framework

Standardized Treatment

Position limits for crypto ETF options will now be determined under each exchange’s standard framework, which sets limits based on trading volume and shares outstanding. Under these rules, options on large, liquid ETFs can qualify for position limits of 250,000 contracts or more.

This alignment means crypto ETF options now receive the same regulatory treatment as options on other commodity-based ETFs such as the SPDR Gold Trust (GLD) and iShares Silver Trust (SLV), both of which already benefited from higher position limits and FLEX option availability.

FLEX Options Access

The rule changes remove restrictions that previously prevented crypto ETF options from trading as FLEX options. FLEX options are exchange-traded options that allow investors to customize contract terms including:

• Non-standard strike prices

• Customizable expiration dates

• Flexible exercise styles

• Bespoke settlement terms

This feature, previously available for comparable commodity ETFs, enables institutions to negotiate tailored contract terms for structured products and hedging strategies.

Institutional Implications

Enhanced Trading Flexibility

The removal of position caps enables more efficient institutional strategies:

Hedging strategies: Institutions can establish larger hedged positions without being constrained by artificial caps

Basis trades: Improved capacity for arbitrage between spot ETFs and options markets

Overlay programs: Greater flexibility for structured product creation and portfolio management

Block trading: Larger positions can be executed without fragmenting across multiple contracts

Liquidity Impact

The increased position limits are expected to boost liquidity in crypto ETF options markets, making it easier for institutional participants to enter and exit positions. The move comes as Bitcoin traded near $68,000 and Ether near $2,057 following broader market pullbacks.

Pending Nasdaq Proposal

Separately, Nasdaq ISE has a pending proposal to raise IBIT-specific options position limits to 1 million contracts. The filing, currently on its fifth amendment, would bring IBIT closer to parity with the largest equity ETFs. The SEC is still reviewing this proposal, which remains open for comment.

Frequently Asked Questions

What is the significance of removing the 25,000-contract options cap?

The removal aligns crypto ETF options with other commodity-based ETF options across all major U.S. exchanges. It eliminates an artificial constraint that limited institutional participation and trading flexibility, allowing position limits to be determined by standard exchange rules based on trading volume and shares outstanding rather than a blanket cap.

Which ETFs are affected by the rule changes?

The rule changes apply to options on 11 spot Bitcoin and Ether ETFs, including BlackRock’s iShares Bitcoin Trust (IBIT), Fidelity’s Wise Origin Bitcoin Fund (FBTC), ARK 21Shares Bitcoin ETF (ARKB), Grayscale’s Bitcoin and Ethereum trusts, and Bitwise’s Bitcoin and Ethereum ETFs.

What are FLEX options and why do they matter?

FLEX options are exchange-traded options that allow investors to customize contract terms including strike prices, expiration dates, and exercise styles. Previously unavailable for crypto ETF options, this feature enables institutions to negotiate bespoke contract terms for structured products and hedging strategies, similar to what was already available for comparable commodity ETFs like the SPDR Gold Trust (GLD) and iShares Silver Trust (SLV).

Is the 1 million contract limit for IBIT now approved?

No. Nasdaq ISE’s proposal to raise IBIT-specific options position limits to 1 million contracts remains pending SEC review. The filing is currently on its fifth amendment, and the SEC has not yet ruled on the proposal.