Why are there no position limits on index options?

[Con1991]

On index options such as SPX, RUT, NDX, DJX etc there are no position and exercise limits in effect. Most brokers still have some kind of order position limits however. I understand that these options are cash-settled, so that may have something to do with the unlimited position limits.

How feasible or common is it for institutional traders to come along and place an order for say, 50 million contracts on the SPX at any strike prices? Would an order like this ever be filled? What is the largest index option trade ever executed in one click? Since equity options generally have position limits of up to and no more than 250k contracts, I am interested to know the largest sizes on index orders that have been placed.

Of course the more contracts there are, the larger the profit and loss swings will be. Curious about this.

 

[Scataphagos]

On index options such as SPX, RUT, NDX, DJX etc there are no position and exercise limits in effect. Most brokers still have some kind of order position limits however. I understand that these options are cash-settled, so that may have something to do with the unlimited position limits.

How feasible or common is it for institutional traders to come along and place an order for say, 50 million contracts on the SPX at any strike prices? Would an order like this ever be filled? What is the largest index option trade ever executed in one click? Since equity options generally have position limits of up to and no more than 250k contracts, I am interested to know the largest sizes on index orders that have been placed.

Of course the more contracts there are, the larger the profit and loss swings will be. Curious about this.

Last I heard (perhaps old news)... the position limit on the ES was 20,000 contracts. That's big enough to be outside the reach of most of us retail screen jockey traders.

 

[Con1991]

Last I heard (perhaps old news)... the position limit on the ES was 20,000 contracts. That's big enough to be outside the realm of most of us retail screen jockey traders.

Yes, but the ES is in relation to futures isn't it? The SPX which is the options, apparently does not have any position limits.

 

[Quanto]

Any examples for why it's supposedly bad if there is no limit?

After all the top BidSizes and AskSizes in the orderbook define how much can be filled when the prices match...
So, is then a size limit really needed?

 

[cesfx]

Mate... All your threads ask the same question over and over again lol

 

[Con1991]

Mate... All your threads ask the same question over and over again lol

How very constructive. Perhaps all your answers are exactly the same too. Move on.

 

[cesfx]

How very constructive. Perhaps all your answers are exactly the same too. Move on.

Paganini does not repeat.

Thank you for your constructive, well-informed reply.

 

[Overnight]

On index options such as SPX, RUT, NDX, DJX etc there are no position and exercise limits in effect. Most brokers still have some kind of order position limits however. I understand that these options are cash-settled, so that may have something to do with the unlimited position limits...

Why does my knee-jerk reaction, my intuition, say that there are position limits for them at the CME?

 

[Con1991]

Why does my knee-jerk reaction, my intuition, say that there are position limits for them at the CME?

https://www.cboe.com/tradable_products/sp_500/spx_options/specifications/ Well, here are the official specifications for the SPX from the CBOE website, as an example. If you scroll down to position limits, it clearly states that none are in effect.

 

[Overnight]

https://www.cboe.com/tradable_products/sp_500/spx_options/specifications/ Well, here are the official specifications for the SPX from the CBOE website, as an example. If you scroll down to position limits, it clearly states that none are in effect.

My bad, you are talking options on the indices, I read it as options on the index futures.