For options, it is the maximum amount of contracts that an individual or group of investors can have on an underlying security. “The current limit is 2,000 contracts on the same side of the market (for example, long calls and short puts are on the same side of the market), the limit applies to all expiration dates”.
Position limits are designed to limit the amount of risk exposure for a particular investor or group of investors. Additionally, any person who is the owner or beneficial owner of 10% or more of an equity class must file a report with the SEC.
This report is called a Section 12 registration, and it requires the person to report all their holdings of the issuing security. Subsequently, the person is also required under Section 16(a) to report changes in their ownership in the reported security.