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NYSE removes limits on Bitcoin and Ether ETF options after SEC approval
- NYSE removes the 25,000 contract cap on BTC and ETH ETF options following fast-track approval from the SEC.
- The new rules tie limits to liquidity, allowing ETF option positions to exceed 250,000 contracts.
- Approval of FLEX options expands customizable strategies for major crypto ETFs.
U.S. exchanges affiliated with the New York Stock Exchange have amended their rules, removing key restrictions on options trading tied to spot Bitcoin and Ether ETFs. This significantly changes how these derivatives are managed.
The amendments filed with the U.S. Securities and Exchange Commission (SEC) eliminate the long-standing 25,000 contract limit on positions and executions for these products. The SEC approved the changes without the standard 30-day waiting period, allowing them to take effect immediately.
New rules link limits to liquidity
Under the updated rules, strict caps no longer apply. Instead, each exchange uses its own general criteria, taking into account factors such as trading volume and shares outstanding. This approach enables significantly higher thresholds for actively traded products, exceeding 250,000 contracts for highly liquid ETFs.
The removed cap was introduced in November 2024, when crypto ETF options trading was still in its early stages. At the time, regulators and exchanges applied conservative measures to maintain market stability.
However, as trading activity increased, market participants raised concerns that the fixed limit restricted their capabilities compared to other asset classes.
FLEX options expand trading strategies
The new rules also allow trading of FLEX options linked to major crypto ETFs. These instruments enable traders to customize contract terms, including strike price and expiration date.
The update applies to options tied to major funds such as BlackRock’s IBIT, FBTC, ARKB, and Grayscale products from Fidelity. Previously, FLEX options were restricted for these ETFs.
The approval of FLEX options expands derivatives strategies and provides more tools for institutional traders.
Market alignment and Nasdaq proposal
With these changes, NYSE Arca and NYSE American have joined other major U.S. options exchanges that have already removed the 25,000 contract limit. The SEC stated that these changes do not introduce new regulatory concerns.
Separately, Nasdaq ISE has proposed further increasing position limits for options linked to BlackRock’s IBIT ETF to up to 1 million contracts. This proposal is currently under review by the SEC.
