A large spread trade is when a trader enters a multi-leg options strategy (buying one option while selling another) with big notional size — often $200k, $500k, or $1M+.
● These aren’t retail plays — they’re almost always institutional trades.
● Large spreads can be for directional bets, hedges, or income strategies.
Why do traders care?
● Size = conviction. Big spreads suggest institutional players are positioning.
● Less noise. Large spreads are unlikely to be random gambles.
● Can signal market regime. For example, lots of put spreads = protection mode; call spreads = bullish bets with defined risk.
How to spot it in flow (quick tells)
● Trade shows as a multi-leg order (e.g., buy one strike, sell another).
● Notional size thresholds:
○ $200k+ → noteworthy, not retail.
○ $500k+ → strong institutional involvement.
○ $1M+ → whale trade, worth tracking closely.
● Executed as a block (all legs together) rather than random prints.
● Typically done at mid-price (institutions aim for efficient execution).
Interpreting the intent
● Debit Spread (paying to enter): Trader is betting on direction but limiting risk.
● Credit Spread (getting paid to enter): Trader expects the stock to not move beyond certain levels (income/hedge).
● Very large spreads (> $1M): Often institutional hedges, not just speculative plays.
Rules of thumb
● “Follow the whales.” Spreads over $500k deserve extra attention.
● Check direction: Call spreads = bullish bias, Put spreads = bearish/protection.
● Match with flow: If spreads align with overall sentiment/volume → stronger signal.
● Context matters: Around earnings or Fed events, big spreads often = hedges.
Practical playbook
● Directional confirmation: If you see a $500k+ debit call spread at ask, in line with bullish sentiment → consider a smaller mirrored play.
● Income/hedging: If institutions are loading large credit spreads, it often signals they don’t expect wild moves.
● Avoid over-interpreting single prints: One $1M hedge doesn’t flip sentiment — look
for clusters.
Quick checklist (Large Spread Scan)
● Notional size? ($200k, $500k, $1M+)
● Debit (buyer paying) or Credit (seller collecting)?
● At ask (bullish/defensive buying) or bid (selling premium)?
● Does it align with overall flow?
● Is there a catalyst (earnings, macro event)?