Series 7: 5.2.4.5. Position And Exercise Limits

5.2.4.5. Position and Exercise Limits

A position limit is the maximum amount of contracts an individual can have at any one time on a given stock on a single side of the market. The OCC sets five position limits for the options market. Each option is assigned one of these five position limits based on the underlying stock’s trading volume and number of shares outstanding. The higher the volume and the greater the number of shares, the higher the assigned position limit is. Every six months, it reviews each of these stocks and assigns new position limits.

The same side of the market refers to whether an options position is bullish or bearish. A bullish position is betting that the price of a stock will go