What strike do DII's prefer when they go long on puts?

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1

@iamshrimohan Ji,

I believe you have got exposure to the Indian capital markets that goes beyond what a typical retail investor or trader would do on a daily basis.

Could you please explain what a retail investor or trader ought to think when market participant data indicates that DIIs have purchased puts?

  1. DIIs have purchased puts for the sole purpose of hedging or as a backup strategy to profit from derivative activity.

  2. Which strikes—ATM, FAR or NEAR ITM, FAR or NEAR OTM—do they typically prefer?

Thank you,

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@pulsate_half441 DIIs is a broader umbrella which includes the mutual funds, AIF, Hedge Fund and they have different strategies to operate in the market. However from put buying perspective, they do solely to hedge their portfolio. DII will never buy options to “trade” as speculate as such. Selection of strikes depends on the fund manager and it is not a single strike. They create a spread of strikes based on their analysis.

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