Institution Option Trading Part-7

Regulatory & Risk Considerations
SEBI (India) & SEC (US) regulations limit speculative exposure.

Institutions must report Open Interest, Position Limits, Margin Usage.

Must adhere to VaR (Value at Risk) frameworks and internal risk policies.

Institutional Trading during Events
Earnings Seasons: Institutions use straddles/strangles for earnings plays.

Budget or RBI Policy: Protective collars/volatility trades.

Global Crisis (e.g. COVID): Use of massive protective puts (SPX, NIFTY).

VIX & Institutional Behavior
India VIX plays a vital role in determining institutional option strategies.

High VIX = buying protection, long gamma strategies.

Low VIX = selling premium, income strategies.