![]() ![]() I have all these built in my filter so every trade you see there meets these criteria.Īfter you have identified the UOA, there are a few things that you can do to set up your trade and increase the probability of making profitable trades: I can confidently say 99% because these days sophisticated algos have analyzed decades of options flow data and backed up the conclusions drawn above. Changes in IV can confirm bullish or bearish sentiment and show whether we have Buying or Selling taking place. Looking Implied Volatility (IV): If there is demand for the options, the IV will move.Looking Volume vs Open Interest: When Volume is significantly higher than Open Interest, chances are the activity is an opening transaction/Buy.This is true regardless of whether it is a Put or Call. Looking the Bid & Ask: When a lot of trading activity is on the Askside, chances are buyers are initiating the trade.So it is more important to look at who initiated the trade to get an idea of what the intent of the trader is and the sort of outcome that we can expect. Even so you still won’t be 100% sure but there are ways that can make us about 99% sure: The truth is that we can never be 100% sure if the contracts were bought or sold. The way the market works is that there is always a buyer for every seller and a seller for every buyer. ![]() How To Tell If The Unusual Options Activity Contracts Are Bought Or Sold In most cases, those who initiated the trades have deep pockets & can sit on a drawdown much longer than you can.You can never know for sure what the intent of the buyer is or whether a particular trade is a hedge or straight speculative play.Even the smart money gets it wrong sometimes so don’t expect miracles. ![]() So the more you see it, the better you will track & trade it. Experience & trader’s intuition play a big part in deciding which UOA trades to take.UOA is NOT an exact science so it is subject to a lot of “trader’s intuition”.You should have a core Trading Strategy and then use UOA as just an additional tool. UOA should be used to supplement an existing strategy.Simply put, you can get profitable trade ideas!Ħ Facts You Need To Know & Accept Before You Trade UOA ![]() This group is known collectively as the “Smart Money”. So, tracking their daily activity gives important insights into what the smart money is doing with regards to a particular stock, sector or even the whole market and you can benefit from tracking this info. This group is savvy, well informed and use a variety of different strategies. The anomalies that count as unusual include large $ trades, large trade size relative to Open Interest, Sweeps & repeat buying.Ī lot of services sell Order Flow data but very few actually sell real UOA.Ī large amount of the daily volume in the options market is produced by institutions, hedge funds , successful private investors, and other experienced traders. Most people tend to confuse order flow with unusual activity but, as you will see, they are not quite the same. Options order flow is just the real time transactions in the Options markets. Unusual Options Activity is the occurrence of anomalies in Options Order Flow. I feel like I have the authority to do this because I have been trading UOA for many years now and have built many filters and Unusual Options Activity scanner s over the years. And I want to correct some of the myths out there. There are numerous sources online that are just outright misrepresenting what UOA is and how it is used. The purpose of this article is to break down the concept of Unusual Options Activity into simple language and show you exactly how to use it profitably. My name is Chris Corwin Gayle and I am a trader and Trading System developer. ![]()
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