Key Takeaways
- • Options volume on BlackRock's spot bitcoin ETF (IBIT) hit a record 2.33 million contracts on Thursday, February 5, 2026, as the fund fell 13% to its lowest level since October 2024, according to CoinDesk.
- • IBIT options buyers paid a record $900 million in premiums that day, the highest single-day total ever recorded for the fund's options.
- • Analyst Parker argues the activity reflects a leveraged hedge fund blowup, with margin calls forcing the sale of IBIT shares and driving a record $10 billion in spot volume; options expert Tony Stewart of Pelion Capital calls that theory inconclusive.
- • Stewart cites Amberdata data showing about $150 million of the premiums came from buybacks of previously sold puts, with the rest mostly smaller trades typical of a volatile session.
- • Market participants say IBIT options are now large enough to influence crypto markets, and traders may need to monitor them alongside ETF inflows.
Summary
Options trading on BlackRock's spot bitcoin ETF, IBIT, surged to a record 2.33 million contracts on Thursday as bitcoin crashed, according to CoinDesk. The fund fell 13% to its lowest level since October 2024, with puts narrowly outpacing calls, a pattern typically associated with heightened demand for downside protection during sell-offs. Premiums paid by IBIT options buyers reached a record $900 million that day, the highest single-day total ever.
A viral post by market analyst Parker on X attributes the activity to the blowup of one or a few large hedge funds with nearly all of their capital invested in IBIT. According to Parker, the funds bought out-of-the-money call options after the October crash, financed with borrowed money, and doubled down as the price fell. When IBIT dropped on Thursday, the calls lost value, brokers issued margin calls, and the fund dumped large amounts of IBIT shares, contributing to the record $10 billion in spot volume. Parker also contends the fund rolled expiring calls or closed losing positions, adding to the premium total. Shreyas Chari, director of trading and head of derivatives at Monarq Asset Management, said systematic selling across the majors was probably tied to margin calls, particularly in IBIT, the ETF with the highest crypto exposure. In a Telegram chat, he cited rumors of a short options entity that had to sell the underlying more aggressively after bitcoin broke $70,000 and then $65,000, exacerbating the move to $60,000.
Tony Stewart, founder of Pelion Capital and an options expert, takes a more skeptical view. Citing Amberdata on X, he said about $150 million of the $900 million in premiums came from buybacks of put options by traders who had previously sold them and faced losses as the puts surged. He described those closes as "certainly painful" and said the remainder consisted mostly of smaller, standard trades. Stewart concluded that the hedge fund blowup theory is "inconclusive from the Options standpoint" and "doesn't seem enough tbh in size," while acknowledging that some activity could have occurred in privately negotiated over-the-counter deals.
The episode underscores that IBIT options now carry enough scale to influence crypto markets. Whether the activity reflected a single fund failure or broad market panic remains unresolved in the reporting, but traders are advised to track IBIT options as closely as they track ETF inflows.
A viral post by market analyst Parker on X attributes the activity to the blowup of one or a few large hedge funds with nearly all of their capital invested in IBIT. According to Parker, the funds bought out-of-the-money call options after the October crash, financed with borrowed money, and doubled down as the price fell. When IBIT dropped on Thursday, the calls lost value, brokers issued margin calls, and the fund dumped large amounts of IBIT shares, contributing to the record $10 billion in spot volume. Parker also contends the fund rolled expiring calls or closed losing positions, adding to the premium total. Shreyas Chari, director of trading and head of derivatives at Monarq Asset Management, said systematic selling across the majors was probably tied to margin calls, particularly in IBIT, the ETF with the highest crypto exposure. In a Telegram chat, he cited rumors of a short options entity that had to sell the underlying more aggressively after bitcoin broke $70,000 and then $65,000, exacerbating the move to $60,000.
Tony Stewart, founder of Pelion Capital and an options expert, takes a more skeptical view. Citing Amberdata on X, he said about $150 million of the $900 million in premiums came from buybacks of put options by traders who had previously sold them and faced losses as the puts surged. He described those closes as "certainly painful" and said the remainder consisted mostly of smaller, standard trades. Stewart concluded that the hedge fund blowup theory is "inconclusive from the Options standpoint" and "doesn't seem enough tbh in size," while acknowledging that some activity could have occurred in privately negotiated over-the-counter deals.
The episode underscores that IBIT options now carry enough scale to influence crypto markets. Whether the activity reflected a single fund failure or broad market panic remains unresolved in the reporting, but traders are advised to track IBIT options as closely as they track ETF inflows.
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