Explanation:
Large trades placed by hedge funds, banks, or other big players.
😎 Pro Tip: These players move size and often know something retail doesn’t.
Rule of Thumb: Follow the elephants, not the ants—institutions can move markets.
An institutional trade is a large options order placed by big players like hedge funds, pension funds, banks, or asset managers.
These trades typically involve hundreds of thousands or millions of dollars, far beyond retail capacity.
Why do traders care?
● Size = influence. Institutions can move markets with their orders.
● Smart money. Institutions often have better research, tools, and data.
● Footprints. Their activity leaves visible signals in the options tape.
How to spot it (quick tells)
● Notional size: Trades worth $500k, $1M+.
● Blocks or sweeps: Executed in big chunks or across multiple exchanges.
● Unusual strikes/expiries: Institutions sometimes play unique structures for hedging.
● Volume > Open Interest: Indicates fresh positions, not just closing trades.
● Execution style: Often at midpoint or ask to get filled efficiently.
● Can be across multiple exchanges (same time window).
Interpreting the intent
● Directional bets: Institutions loading calls/puts at ask → strong conviction.
● Hedging: Large protective puts, especially around events (earnings, Fed, geopolitics).
● Rolling positions: Moving from one expiry to another to maintain exposure.
Rules of thumb
● “Follow the elephants, not the ants.” Big trades = more meaningful.
● Size alone isn’t enough. Always confirm intent (hedge vs bet).
● Clusters > singles. Multiple institutional trades in the same direction = conviction.
● Index trades = macro signal. SPY/SPX/QQQ institutional trades often set tone for broader market.
Practical playbook
● If bullish institutional flow (large call sweeps at ask, clustered):
○ Mirror with call spreads or long calls (small size).
● If bearish institutional flow (large put sweeps, clustered):
○ Mirror with put spreads or risk-off positioning.
● If hedge-like trades (huge far OTM puts before events):
○ Treat it as a caution signal, not necessarily a directional bet.
Quick checklist (Institutional Trade Scan)
● Is the notional size huge ($500k+)?
● At ask (buying) or bid (selling)?
● Sweep or block?
● Volume vs OI? New or old position?
● Clustered with other big trades?