How IBIT options dominance is changing Bitcoin ETF hedging

I see the Bitcoin options market moving toward IBIT. In April 2026, IBIT options open interest hit $27.6 billion in notional value, which surpassed Deribit’s $26.9 billion. IBIT accounts for 75% to 80% of the total Bitcoin spot ETF options trading volume. This volume averages between $2.7 billion and $3.0 billion in daily options trading. I compare the liquidity of IBIT to FBTC to understand the spread. FBTC has a share price of $68 and a put bid-ask spread of $0.45. IBIT has a share price of $45 and a much tighter put bid-ask spread of $0.02. This difference means serious traders avoid FBTC to prevent slippage. I compare IBIT to the world’s largest gold ETF, GLD. IBIT has 7 million contracts outstanding, whereas GLD has an average of 700,000. IBIT’s total options notional value is $31.5 billion, which is close to the $30 billion notional value of GLD. I see that IBIT’s options trading volume regularly exceeds the trading volume of the underlying ETF. I see that IBIT dominates the market, while FBTC only holds 11% of the total Bitcoin spot ETF options trading volume and stays in second place.

Moving beyond the 250,000 contract cap

Nasdaq ISE filed a proposal to increase the position and exercise limits for IBIT options. They want to raise the 250,000 contract limit to 1,000,000 contracts. The exchange argues that the current 250,000 contract limit will impede trading activity and strategies of investors, such as use of effective hedging vehicles or income generating strategies like buy-write or put-write. I find the existing 250,000 contract limit a restrictive bottleneck for traders needing to execute large hedging orders. The market capitalization of IBIT reached $86,243,795,200 by September 2025. Its 180-day average daily volume reached 44,590,758 shares. I look at the IBIT position limit compared to other ETFs. A full exercise of 1,000,000 contracts would equal 0.284% of the total Bitcoin supply. This change would put IBIT limits in line with the iShares MSCI Emerging Markets, iShares China Large-Cap, and iShares MSCI EAFE ETFs. The exchange notes that IBIT’s growing market capitalization and liquid markets reduce concerns for market manipulation.

Volume shifts in the derivatives market

The Bitcoin derivatives market changed when options open interest reached $74.1 billion. This figure surpassed the $65.2 billion in Bitcoin futures open interest. IBIT holds $37.12 billion of the total Bitcoin option open interest, while Deribit holds $30.84 billion. For the week of September 21, 2026, IBIT total open interest reached 58,627 contracts. Call open interest reached 37,017, and put open interest reached 21,610. This produces a put-call open interest ratio of 0.58. I notice the heavy call concentration. I see traders using IBIT to express directional views. You should check if these concentration levels create new volatility patterns. Why do traders ignore the puts so frequently? Cboe also provides cash-settled and European exercise options on IBIT. These options use the IBIT index and provide 1/10th the notional value of standard options through the Cboe Mini Bitcoin U.S. ETF Index. Market makers hedge their options exposure by trading IBIT shares. When large options positions exist, dealer hedging demand can reach 10 million shares. This is about 12% of the typical daily volume for IBIT. I see that IBIT holds about $65 billion in assets, while FBTC holds around $15 billion. I see that IBIT’s volume is massive. I see that IBIT is the main tool for institutions to manage Bitcoin risk.