Introduction to Institutional Option Trading
Institutional option trading refers to the sophisticated strategies used by hedge funds, mutual funds, insurance companies, proprietary trading firms, and foreign institutional investors (FIIs) to manage portfolios, hedge risks, and generate consistent alpha from the derivatives market. Unlike retail traders, institutions operate with large capital, access to advanced technology, and deep market insights, allowing them to structure complex trades.
2. Why Institutions Trade Options
Institutions don’t usually trade options for quick profits. Their trades are designed to meet broader objectives:
Hedging Equity Portfolios
Volatility Trading
Generating Yield on Holdings
Market Making and Arbitrage
Directional or Non-directional Speculation
3. Core Institutional Option Strategies
Let’s explore the most popular strategies that institutions use with real-world logic behind them.
A. Covered Call (Buy-Write)
Use: Income generation from long-term stock holdings
Structure: Buy stock + Sell Call Option (OTM or ATM)
Institutional Use Case:
A mutual fund holding Reliance shares might sell monthly call options against its holdings to generate monthly income (premium), enhancing total returns.
Institutional option trading refers to the sophisticated strategies used by hedge funds, mutual funds, insurance companies, proprietary trading firms, and foreign institutional investors (FIIs) to manage portfolios, hedge risks, and generate consistent alpha from the derivatives market. Unlike retail traders, institutions operate with large capital, access to advanced technology, and deep market insights, allowing them to structure complex trades.
2. Why Institutions Trade Options
Institutions don’t usually trade options for quick profits. Their trades are designed to meet broader objectives:
Hedging Equity Portfolios
Volatility Trading
Generating Yield on Holdings
Market Making and Arbitrage
Directional or Non-directional Speculation
3. Core Institutional Option Strategies
Let’s explore the most popular strategies that institutions use with real-world logic behind them.
A. Covered Call (Buy-Write)
Use: Income generation from long-term stock holdings
Structure: Buy stock + Sell Call Option (OTM or ATM)
Institutional Use Case:
A mutual fund holding Reliance shares might sell monthly call options against its holdings to generate monthly income (premium), enhancing total returns.
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Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
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Hello Everyone! 👋
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
相關出版品
免責聲明
這些資訊和出版物並不意味著也不構成TradingView提供或認可的金融、投資、交易或其他類型的意見或建議。請在使用條款閱讀更多資訊。