Let’s start with why we may see Unusual Options Activity that’s really a hedge on an equity position.Īn institution may have a large equity position (long or short) in an individual ticker. An activist investor taking a new position in a company.Influential analyst upgrades or downgrades the stock.
#Call sweep bullish meaning drivers
Primary drivers of Unusual Options Activity: What makes Unusual Options Activity such a powerful leading indicator of upcoming market movements are the main drivers of why we typically see this unusual activity. The answer is simple: these trades give us high-potential trade ideas if identified correctly. So why do we care about these unusual options trades? This indicates a new or “fresh” position.The strike is very far from the spot rate, implying an expectation of a large movement.This implies an expectation of a quick movement happening before the expiration date.Up to 5-10 times more than the daily average.Large spike in options volume compared to the daily average In other words, a large concentration in a single contract.Single options contract with large volume compared to the average contract size There’s no single definition for Unusual Options Activity, but below are a few key characteristics that have proven to be indicative of large upcoming movements: What kind of anomalies are considered Unusual Options Activity? We call these anomalies Unusual Options Activity, and oftentimes, this unusual activity serves as a leading indicator ahead of a large movement in the underlying stock. However, in those millions of trades, there are always a few “unusual” options trades that don’t seem to make sense under normal circumstances. Millions of options contracts are traded each day, but most of them aren’t very interesting. the 6M+ options contracts traded on a daily basis). Put simply, Unusual Options Activity (UOA) represents anomalies in the Options Order Flow (i.e.
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