IBIT options trading volume surges to $446M in opening hours, $1.6B by mid-day

Roughly 98% of all options are 'call' orders to buy BTC, which analysts deemed very bullish.

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Options trading for BlackRock’s exchange-traded fund (ETF), iShares Bitcoin Trust ETF (IBIT), started on Nov. 19 at Nasdaq and has already moved over $446 million in its first trading hours.

Bloomberg senior ETF analyst Eric Balchunas remarked that the volume is “a ton” for a first day, with nearly 98% of trading contracts being calls. He added:

“Seems very bullish, esp the Dec20th C100, which is basically betting price of btc [Bitcoin] will double in the next month.”

A “call” in an option contract gives the right to purchase a security at a predetermined price, known as the strike price, within a specific period, called the expiration date. 

IBIT’s spot trading volume reached $1.6 billion as of press time, based on Barchart data. 

More to come

The addition of options trading to IBIT came quickly following the Office of the Comptroller of the Currency’s (OCC) Nov. 18 memo that stated it was “preparing for the clearance, settlement, and risk management.”

The approval gives the green light for options trading for IBIT and other spot Bitcoin ETFs, as pointed out by Bloomberg ETF analyst James Seyffart, who expects more listing of these products this week.

Bitwise CEO Hunter Horsley expects options trading on the firm’s BITB to start on Nov. 20.

‘Unusual market dynamics’

Balchunas previously said that options listing for spot Bitcoin ETFs is a positive development, as it gives more tools for traditional investors and attracts more liquidity from “big fish.”

However, Jeffrey Park, head of alpha strategies at Bitwise, stated that Bitcoin still receives special treatment for trading. He pointed out that IBIT has only 25,000 contracts as an approved position limit, representing only 0.5% of the ETF’s shares.

An option contract limit limits the number of contracts that can be held on the same side of the market. The limit varies by ETF based on the number of outstanding shares and trading volume.

According to Park, IBIT should have qualified for 400,000 options contracts, which would have reached only 7% of the outstanding shares. He also compares IBIT’s limit with CME Bitcoin futures contracts’ 2,000-contract limit, equivalent to 175,000 contracts for IBIT.

Park added:

“While I’m thrilled we’ve crossed the finish line — especially in 2024 — it’s hard to ignore the lingering special treatment Bitcoin continues to receive. I long for the day when Bitcoin is no longer marked with an asterisk.”

He explained that the 25,000-contract limit might create “unusual market dynamics” and advised retail traders to explore arbitrage opportunities that could arise as a result of Bitcoin ETF options.

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