Institution Option Trading Part-6

Introduction to Institutional Option Trading
Institutional option trading refers to the use of options by large financial institutions such as hedge funds, pension funds, insurance companies, mutual funds, and proprietary trading desks to manage risk, enhance returns, or speculate on price movements. Unlike retail traders, institutions bring scale, research, and complex strategies to the options market.

Slide 2: Key Characteristics of Institutional Traders
Large Capital Base: Institutions trade in bulk with millions or billions of dollars.

Data Advantage: Access to premium data, analytics, and predictive algorithms.

Advanced Infrastructure: High-frequency execution systems, smart order routing.

Risk Management Focus: Use options for hedging equity, credit, FX, or commodity exposure.

Regulatory Boundaries: Subject to risk limits, compliance, and disclosures