A significant development occurred on Friday, marking a major milestone in the institutionalization of the bitcoin market. This is evident in the fact that options linked to BlackRock's bitcoin exchange-traded fund (ETF), IBIT, have become more prominent on Nasdaq than total bitcoin options trading on the offshore platform Deribit. Notably, IBIT options have closed the gap with Deribit's bitcoin options market in just two years, despite Deribit's head start since 2016.
On Friday, the dollar value of open IBIT options contracts on Nasdaq, also known as open interest, reached $27.61 billion, slightly higher than the $26.90 billion in Deribit's bitcoin options. This achievement signifies that the regulated, institutional-grade bitcoin investment and derivatives infrastructure in the US is now on par with the offshore market.
The growth of a thriving, regulated market in the US could encourage more Wall Street institutions to explore digital assets, ultimately leading to more mature price discovery. Deribit's Global Head of Retail Sales and Business, Sidrah Fariq, views IBIT's rise as a positive development for the broader crypto derivatives ecosystem, providing US retail investors with direct access to regulated leverage and options exposure. Options are derivative contracts that grant the purchaser the right to buy or sell the underlying asset at a predetermined price at a later date. Analysts use open interest as a measure of market size and participation, with higher open interest indicating a deeper and more liquid market.
Traders utilize options to hedge existing positions, speculate on price direction, and generate income on coin or ETF holdings. One popular income-generating strategy involving IBIT ETF and IBIT options is the covered call strategy, which allows investors to profit from BTC's implied volatility by holding the ETF and shorting IBIT calls at levels above the ETF's current market price. The two markets, though now matching in scale, are positioned differently, revealing distinct trader sentiments.
According to Volmex, the majority of open interest in IBIT call options is concentrated at strike levels equivalent to bitcoin trading around $109,709, roughly 41% above the current price. In contrast, Deribit options positioning is slightly more conservative, with call open interest clustered around levels equivalent to approximately $106,000 in BTC terms. The average delta is also lower for onshore flow, consistent with retail upside speculation and systematic call overwriting programs. Put positioning is largely aligned across venues, with open interest concentrated around the $63,500 strike.
ETF holders tend to have a longer-term perspective, with October 2026 expiries preferred in IBIT, while August expiries dominate on Deribit. Lastly, IBIT's implied volatility is higher than the implied volatility derived from Deribit's BTC options, attributed to a structural quirk where ETF holders buy put options as a hedge due to the inability to short bitcoin directly. Overall, IBIT's rapid rise in the options market is notable, and while it may rival Deribit in scale, the two are not direct substitutes, catering to different investor bases and market needs.