BlackRock Bitcoin ETF Options Surge Amid Market Chaos
By John Nada·Feb 7, 2026·2 min read
BlackRock's IBIT ETF options trading soared to 2.33 million contracts amid a bitcoin crash, raising concerns over potential hedge fund fallout. The market's reaction highlights the ETF's influence.
Options trading for BlackRock's spot bitcoin ETF, IBIT, skyrocketed to a record 2.33 million contracts as bitcoin faced a significant crash. According to CoinDesk, this spike in activity occurred on February 7, 2026, coinciding with a 13% drop in the ETF, marking its lowest level since October 2024. Investors have flocked to the ETF, drawn by the appeal of accessing bitcoin without needing crypto wallets or exchanges.
The dramatic options volume surge raised eyebrows among traders and analysts, who are now compelled to monitor these contracts as closely as they do ETF inflows. The day saw puts outpacing calls, indicating a heightened demand for downside protection—common during price declines. Options, which serve as insurance against price swings, saw a record $900 million in premiums paid by IBIT options buyers, the highest single-day total ever.
Market analyst Parker proposed that this unprecedented trading activity may be linked to the collapse of a large hedge fund heavily invested in IBIT. According to his viral post on X, the hedge fund had initially purchased cheap out-of-the-money call options, anticipating a swift recovery after an earlier crash. However, as IBIT's price continued to plummet, the fund was forced to sell significant amounts of IBIT shares to meet margin calls, contributing to the market turmoil.
Shreyas Chari, a derivatives trading director, highlighted systematic selling across major assets, likely driven by these margin calls. He noted that rumors indicated a short options entity had to liquidate aggressively once key price levels were breached, exacerbating the downward movement in the market.
Contrarily, options expert Tony Stewart cautioned against attributing the entire crash and the record activity solely to a hedge fund blowup. He analyzed that a portion of the premiums stemmed from traders buying back put options to mitigate losses, suggesting that the market chaos was a broader reaction rather than the result of a single entity's actions. Stewart acknowledged that some trading activity could be obscured in over-the-counter deals, leaving room for uncertainty.
This incident underscores the growing influence of IBIT options in the market. As trading activity escalates, investors will need to keep a close eye on these options, similar to ETF inflows. Whether driven by isolated events or general market panic, the implications for traders and institutional players are significant—IBIT options are now a vital component of market dynamics.