As Jim Cramer likes to say, volume is a lie detector.

Like an involuntary twitch or a hand to the side of the head at the poker table, unusual options activity tells you that there’s big money on the move.

Volume and Volatility. Such a trade would indicate that the buyer was very aggressive, and willing to pay the premium price to execute the trade.

Insiders, hedge funds, institutions, and corporate raiders all use ’em to pre-position their money ahead of major moves that can result in huge profits. Unusual option trades are that type of option trade. It’s therefore important to decipher who initiated the trade.

Generally volumes above one to two thousand on smaller cap stocks or in the tens of thousands for larger more liquid equities. I have been following “the flow” for many years now, and I agree.

What unusual options trading activity means. It refers to order flow that is out of the ordinary.

Unusual options activity is first and foremost identified by the size of the trade. Unusual Stocks Options Activity Options with unusual activity highlight puts and calls for stocks that have a high volume-to-open interest ratio. Profit with Real Time Trade Alerts. I'll keep this fairly high-level, and I encourage those who are inspired by this post to do more research on the subject.

What Makes This Activity “Unusual?” At or Above Ask Price Look to see if the trade took place at or above the ask price. One has to compare it to the average size trade for that particular stock. But you can’t just look for the biggest trades to discover the unusual aspect of unusual options activity.

This write-up will touch on calls, and how to find unusual options activity. Note I said “typically”. Unusual options activity is a large block trades that represent a large percentage of daily option volume.

For example, 2,000 contracts traded in an Apple option would not be considered unusual, since Apple trades 100,000 option contracts or more daily. Always following the big money could certainly lead you astray. This high relative volume is sometimes innocuous; it could be a hedge, and the traders do get these bets wrong, but sometimes, unusual options activity indicates that a big move in the underlying stock is coming.

TWO WEEKS @ $2/DAY TRIAL When a lot of money is flowing into a security or option, that typically means institutions feel really good about it.
The volume for the underlying equity gives an indication of the strength of the current market direction, while the open interest for the put or call tells you the number of option contracts that are currently "open" (not yet liquidated).

Unusual options activity occurs when a certain contract on a specific series experiences unusually high volume. When a lot of money is flowing into a security or option, that typically means institutions feel really good about it. One of the first obstacles to interpreting unusual option volume is that, for every buyer, there’s a seller. I have been following “the flow” for many years now, and I agree. As Jim Cramer likes to say, volume is a lie detector. Here are some basic criteria for identifying meaningful activity and avoiding the chase for activity that ends up being useless noise. What is unusual option activity? Note I said “typically”. Unusual Options Activity Is Sometimes Predictive In Nature A couple of minutes before the close on a Friday, a trader came in bought 4,674 PCG 12 puts for $1.00 per contract.

It includes stock options bought on the ask or sold on the bid with unusual … The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. What is Unusual Option Activity? Hey all, I've received a good number of requests to post a guide on how exactly one trades high volume unusual options activity. 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.

What unusual options trading activity means. When examining unusual options activity (specifically call buying), I am looking for these signals: Big call buying in comparison to normal trading volume; Large amounts of money put at risk by the call buyer; Repeated bullish activity day after day.

But you can’t just look for the biggest trades to discover the unusual aspect of unusual options activity.

One has to compare it to the average size trade for that particular stock. At the time of the trade, the stock was trading at $17.50.
Option Flow, Unusual Option Activity, Stock and Pennystock Breakouts. Trades at or above the ask tend to be much more significant. 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.