Advanced Institutions Option Trading - Part 8

Institutional Option Trading Strategies
Let’s dive deeper into how big players operate:

🔶 Volatility Arbitrage:
Take advantage of IV mispricing across strikes/months.

Long low IV, short high IV – Net neutral delta.

🔶 Dispersion Trading:
Buy individual stock options, short index options.

Profit from correlation divergence.

🔶 Box Spread (Synthetic Arbitrage):
Arbitrage between synthetic long/short positions.

Very low risk, used by HFT desks.

Institutions use algorithms to run thousands of such strategies in real time.