Part 3 Institutional Trading

Risk Management in Options
Even though options can limit loss, traders often misuse them and blow accounts.
Key risk tips:

Never risk more than 2–3% of capital on one trade.

Understand implied volatility — high IV inflates premiums.

Avoid selling naked options without sufficient margin.

Always set stop-loss rules.

Understanding Greeks (The DNA of Options Pricing)
Delta – How much the option price changes per ₹1 move in stock.

Gamma – How fast delta changes.

Theta – Time decay rate.

Vega – Sensitivity to volatility changes.

Rho – Interest rate sensitivity.

Mastering the Greeks means you understand why your option is moving, not just that it’s moving.