IBIT options market shifts after CBOE weekly contract launch

CBOE expansion and regulatory shifts

Cboe Global Markets introduced pre and post-market trading sessions for options on five exchange-traded funds. The SEC approved options trading for 11 Bitcoin ETFs on the NYSE and CBOE after the Nasdaq approval of BlackRock IBIT options occurred just a few weeks prior to this latest expansion. These regulatory moves follow the November 2026 weekly contract launch. This development coincides with the 340% institutional hedging volume surge in the IBIT options market. The CFTC retains the final word on approvals for products involving commodities like Bitcoin. I see these changes as a way to increase liquidity for large positions outside of regular US market hours.

IBIT liquidity and hedging mechanics

IBIT leads the market in scale and execution. It maintains $52.5B in AUM. Its average daily volume exceeds $3,200M. The bid-ask spread stays at a tight 1 bp. This liquidity makes it the central hub for spot Bitcoin trading. IBIT’s 1-month volatility is 8.58% compared to 8.19% for BTC-USD. The 6-month volatility for IBIT is 26.66% compared to 26.06% for BTC-USD. IBIT’s 1-year volatility is 44.79% compared to 44.04% for BTC-USD. The maximum drawdown for IBIT was -45.00% while BTC-USD saw a -45.08% decline. IBIT’s 2026 year-to-date return is -11.28% while BTC-USD is -11.79%.

Institutional demand for IBIT remains high. BlackRock reported 198,874 shares of IBIT in its July 31 portfolio filing, which increased from 43,000 shares in June. Recent weekly inflows for IBIT reached $111.7 million, trailing behind the $123 million seen in Fidelity’s FBTC. You know how much liquidity matters when you trade these products. I prefer IBIT for heavy volume because the bid-ask spread is only 1 bp. I use a collar strategy to manage downside risk. A collar combines a protective put and a covered call. If I purchase 100 shares of IBIT at $35, I spend $3,500. A $34 strike put has a $1.16 midpoint premium, costing $116. I sell a $35 strike call at a $1.595 midpoint premium to collect $159.50. This leaves me with a net credit of $43.50 while I maintain a floor at $34.

FBTC custody and the skew inversion

FBTC behaves differently than IBIT because Fidelity handles its own custody via Fidelity Digital Asset Services. This setup avoids the third-party counterparty risk associated with funds that rely on Coinbase. FBTC has $19.2B in AUM and $950M in daily volume. Its spread is 1.5 bps, which is wider than the 1 bp spread of IBIT. FBTC’s 2024 total return was 138.3%, slightly beating IBIT’s 138.2%. FBTC also pays a dividend, whereas IBIT does not. The FBTC put-call skew inversion highlights a different investor profile than the high-volume IBIT traders. Will this skew inversion persist through the next volatility cycle? I would skip the IBIT dividend since it does not exist.

ETF competitive comparison

The competitive landscape shows massive differences in cost and scale among the major spot Bitcoin ETFs. BITB offers a 20 bps expense ratio, which is 5 bps cheaper than IBIT. ARKB has a 21 bps ratio, making it 4 bps cheaper than IBIT. BITB has $3.8B in AUM and $120M in daily volume. ARKB has $4.8B in AUM and $180M in daily volume. GBTC is a terrible choice because the 150 bps fee creates a massive drag. GBTC’s tracking difference against spot Bitcoin was -155 bps.

IBIT remains the best option for most traders because of its $52.5B liquidity engine. BITB is better for long-term holders who want the 20 bps fee. FBTC is the better choice for those who want to avoid Coinbase custody. I would skip GBTC entirely due to its 150 bps fee.