Question on option liquidity and open interest/volume

[Victory5]

https://en.wikipedia.org/wiki/Market_impact

If I buy 100k worth of puts on VXX (even if I took a position in the underlying as well), its not going to do anything to the ETF which has its price entirely derived from the movement of front month VIX futures.

Edit: Or are you talking about the options market specifically?

 

[newwurldmn]

Ok that makes a bit more sense.

I guess what I was ultimately trying to ask is what is the (roughly) maximum amount of money you can put into a single option play. Specifically I was looking at the SPY and VXX markets both of which seem to be fairly liquid although the first more so...

Ultimately it seems like the theoretical 'cap' for the number of contracts you can reasonably buy is north of 100k in the markets listed above? Is that correct? I have never had to deal with anything that large but i'm trying to figure out where the limit may be.

100k listed contracts is a noteworthy trade in the SPY (about 10MM/point). 10,000 is pretty standard in insititutional space.

 

[ktm]

There are caps for CME and CBOT products. I think the limit for SP is 28,000 contracts (for all months combined). This number is for directional exposure though, so if you are putting on net neutral spreads, the number may not apply. You also may be subject to large trader reporting if you are doing 100+ lots on these. ES contracts are all of these numbers multiplied by five.

If you really have this problem, congratulations.

 

[Victory5]

There are caps for CME and CBOT products. I think the limit for SP is 28,000 contracts (for all months combined). This number is for directional exposure though, so if you are putting on net neutral spreads, the number may not apply. You also may be subject to large trader reporting if you are doing 100+ lots on these. ES contracts are all of these numbers multiplied by five.

If you really have this problem, congratulations.

Ha, well I don't think i'll be brushing up against that anytime soon (read: never).


It was more out of curiosity and the sizes that many of the larger traders play around with in some of the more liquid options markets. Basically....how big is too big.