• IBIT options surpassed $2 billion in notional exposure.

• The launch of options on bitcoin ETFs had the approval of just 25,000 contracts as a position limit.

• According to Bitwise's head of alpha strategies, Jeff Park, by industry standards, bitcoin ETF options should have seen around 400,000 contracts.

Another Bitcoin-linked product, another success story. This time, it's options tied to BlackRock's iShares Bitcoin Trust (IBIT), which went live on Nasdaq Tuesday giving them a one-day head start over some competitors, which begin trading later Wednesday.

IBIT, which has a market cap of $44 billion, saw over $2 billion in options trading in notional value. The ETF itself traded over $4 billion in volume, surpassed only by SPDR S&P 500 ETF Trust (SPY), Invesco QQQ Trust Series 1 (QQQ) and iShares Russell 2000ETF (IWM), which all have much higher market caps, according to Coinglass data.

Senior Bloomberg ETF analyst Eric Balchunas hailed the success of the day-one performance of the IBIT options. However, it hasn't challenged the top ETFs yet, but he expects that to come in the next few days or weeks.

“$1.9b is unheard of for day one. For context, BITO did $363m, and that's been around for four years. And also this is with 25,000 contract position limits. That said, $1.9b isn't quite a big dog level yet, though, GLD did $5b today, but give it a few more days/weeks”, Balchunas says.

The interesting part of Balchunas's statement is that the position limit size in IBIT and other bitcoin ETF options is tighter than those in traditional finance They have been approved for just 25,000 contracts, meaning that a market participant can only hold or control a maximum of 25,000 contracts at a given point of time.

Jeff Park, the head of alpha strategies at Bitwise, went into length about the unfair treatment that the ETFs received.

Park explained on X that the exercisable risk, representing the total value of option contracts exercised or converted to actual shares, equates to less than 0.5% of IBIT’s outstanding shares. Meanwhile, the industry standard is closer to 7%, which would represent a comparative figure of 7%. To show how small the 0.5% figure is, bitcoin CME futures contracts are allowed to trade 2,000 contracts, which is the equivalent of 175,000 for IBIT.

Park went on to say that he believes the CME Group prefers to trade bitcoin primarily as a futures asset rather than in options. The regulators at the CFTC and the SEC put this cap in place to prevent market manipulation.

“It’s clear to me that CME Group would prefer Bitcoin to trade primarily as futures, positioning itself as the dominant market with launches like "BFFs [Bitcoin Friday futures]." If the CFTC had been as politicized as the SEC, we might not have had a fair launch at all”, Park says.