More FLEX-ible Bitcoin Trading Hits Nasdaq PHLX
Published Date: 8/1/2025
Notice
Summary
The SEC just gave the green light for Nasdaq PHLX to let traders buy and sell FLEX options on the iShares Bitcoin Trust ETF. This means investors can now trade flexible, customizable options on Bitcoin shares, with both cash and physical settlement choices. The change kicks in soon, opening new ways to invest and manage risk in the Bitcoin market.
Analyzed Economic Effects
5 provisions identified: 4 benefits, 1 costs, 0 mixed.
FLEX Options Approved for iShares Bitcoin Trust
On July 29, 2025 the SEC approved Nasdaq PHLX to list and trade FLEX equity options on shares of the iShares Bitcoin Trust (IBIT). These FLEX options may be cash-settled or physically settled, allowing customized option terms to be created and traded on the exchange.
25,000-Contract Aggregated Position Limit
The Exchange will apply a 25,000-contract position and exercise limit on the same side of the market for all IBIT options, and positions in FLEX IBIT options will be aggregated with non-FLEX IBIT options for that limit. If all such options were exercised, that aggregated limit corresponds to receipt of up to 2,500,000 shares.
Exchange Trading Lowers OTC Counterparty Risk
The Exchange stated that FLEX IBIT options traded on the exchange would be issued and guaranteed by The Options Clearing Corporation (OCC), which reduces counterparty credit risk compared to over-the-counter (OTC) FLEX contracts. Exchange trading also provides transparent price discovery and transaction reporting.
Institutions May Use FLEX IBIT for Hedging
The Exchange noted that FLEX options on ETFs are currently used in the OTC market by hedge funds, proprietary trading firms, and pension funds, and that FLEX IBIT options on the exchange may provide a useful risk management and trading vehicle for these market participants and their customers.
Existing Surveillance Applied to FLEX IBIT Trading
The Exchange will apply the same surveillance procedures used for other options, integrate FLEX symbols into existing surveillance systems, and coordinate with FINRA and the Intermarket Surveillance Group to monitor IBIT and FLEX IBIT options for manipulation or abuse.
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Key Dates
Department and Agencies
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Next: 2025-14545, Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 2, To Amend Rules Regarding Position and Exercise Limits for Options on the Grayscale Bitcoin Mini Trust (“BTC”) and the Bitwise Bitcoin ETF (“BITB”) and To Permit Flexible Exchange Options on BTC and BITB
NYSE Arca just got the green light to change the rules for options trading on two popular Bitcoin funds, BTC and BITB. They’re raising the limits on how many options traders can hold and letting these options trade with more flexibility. These updates kick in soon and could open up new ways for investors to play in the Bitcoin options market.