Does Unusual Option Activity Work?

Is follow the smart money worth it?

Follow The Smart Money is an excellent book for those who are interested in learning about options, the stock market, and unusual options activity.

It is written in easy to understand language and filled with real life examples and spot-on analogies..

How do I find options to trade?

Regardless of the method of selection, once you have identified the underlying asset to trade, there are the six steps for finding the right option:Formulate your investment objective.Determine your risk-reward payoff.Check the volatility.Identify events.Devise a strategy.Establish option parameters.Apr 19, 2020

What is considered high open interest?

High open interest means there are many contracts still open, which means market participants will be watching that market closely. … Increasing open interest represents new or additional money coming into the market while decreasing open interest indicates money flowing out of the market.

What is option flow?

Options flow data is the term for options data that is sometimes also referred to as the following: options order sentiment, unusual options activity, option sweeps, or simply order flow.

What does bullish call activity mean?

A bull call spread consists of one long call with a lower strike price and one short call with a higher strike price. Both calls have the same underlying stock and the same expiration date. A bull call spread is established for a net debit (or net cost) and profits as the underlying stock rises in price.

Which option strategy is most profitable?

Option Selling Strategies Selling OptionsOption Selling Strategies Selling Options is by far the most profitable strategy in the long term, with the lowest risk.

Is a call sweep bullish or bearish?

If a Sweep on a Call is BULLISH, this means the Call was traded at the ASK. The buyer was aggressive in getting filled and paid whatever price they could get filled at. This usually has only one outcome, that the buyer was aggressive and wanted to get in at any price.

What does it mean when an option prints?

Any type of confirmation provided from a trading transaction may be considered print. Print confirmations will typically provide all of the details pertaining to a particular trade with pertinent information including the transaction price, number of shares and time of execution.

What is options order flow?

For me, option order flow, or the flow, is one of the best options trading resources out there. … Trade Alert tells us where big option trades are being made. Analysis includes the size of the trade, the type of the trade (buy or sell), and the name that is being traded.

What does unusual option activity mean?

Unusual options activity is simply identifying specific options contracts that are trading a high amount of volume relative to the contract’s average daily volume. … This means that the buyers of these huge options positions expect a move to be made before the expiration date.

Is a call credit spread bullish?

Credit put spread: A bullish position with more premium on the short put. Credit call spread: A bearish position with more premium on the short call.

What is considered high call volume?

High call volume simply means that the call center is experiencing more calls than it’s typically equipped to handle. The severity of high call volume varies depending on the situation as well as the business. Some surges will yield a higher volume of calls while others only create a small increase.

What does unusual call volume mean?

Unusual option activity is defined as a single trade that is bought on the ask or sold on the bid, with unusual volume and/or trade size compared to the open interest for that particular strike and expiry. This means that these are new contracts being traded, expressing a fresh opinion on the underlying.

Is selling a call bullish or bearish?

Thus, buying a call option is a bullish bet–the owner makes money when the security goes up. On the other hand, a put option is a bearish bet–the owner makes money when the security goes down. … selling options: Buying a call: You have the right to buy a security at a predetermined price.