These trades took place late in the session on 4-13-2020. Use MarketBeat's free options scanner to view stocks with unusual call volume activity on the most recent trading day. Here’s how it works. Note that timing on some of these can be crucial. Here are the details of that trade: Buyer of 60,000 January 130/160 Bull Call Spreads (exp. First Data is slated to … Following hedge funds, institutions and big traders into similar options trades has been my most successful strategy for my nearly 20 years trading options. Your email address will not be published. In my opinion, using unusual options activity as an indicator for impending price moves is difficult, subjective, and dangerous. 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. This will add to a similar January 2019 bullish position, a buy of 50,000 January 140/160 Bull Call Spreads, which were already in open interest. Action to take: We like this long-dated trade, as it could provide some big potential returns. Given the amount of time in the option, traders could benefit from any big downswing before the option’s time premium starts to meaningfully decay. You can define UOA by the size of the trade, but just looking for the biggest trades won’t get you too far. 30 Days of MarketBeat All Access for $1.00. After the option alert, the stock price moved down to $188.77. Additionally, if those big institutions were to withdraw … This is a technologically unsophisticated scan, and the following free platforms can perform unusual options activity screens: ThinkOrSwim; Barchart Following earnings yesterday, UNP closed higher by $6.20. More Articles 1. Trades at or above the ask tend to be much more significant. And this morning, a trader bought 15,000 March 130/140 Bull Call Spreads for $0.68. In most cases involving weekly contracts, the trade (for smart money) could last anywhere from minutes to days. Moving Average Convergence Divergence (MACD), Trade Ideas Review – An In-Depth, Unbiased Look, Interview with Trade Ideas CEO – Dan Mirkin, Trade Ideas Scans, Alert Windows & Layouts, Using Trade Ideas Scanner to Find Swing Trades, The Art and Science of Technical Analysis, Technical Analysis Using Multiple Timeframes, TraderMentality’s in-depth review of Trade Ideas. As Jim Cramer likes to say, volume is a lie detector. I have been following “the flow” for many years now, and I agree. Open interest (or OI) represents exiting positions that are outstanding, that are still open as of the beginning of the day. The options channel on the channel bar features many options windows, including “Somebody Knows Something” shown below. Unusual activity in the options market may signal big stock movements in the future. Compare volume to open interest. Please enter your e-mail address. The most you can lose on this trade is $800 per call purchased. Or a total profit of $7,500 on the remaining 5 calls. It refers to order flow that is out of the ordinary. If smart money is playing weeklys, you may miss much of the move if you come in late. S&P 500 3,899.86 (+0.48%) DOW 31,741.28 (+0.65%) QQQ 319.96 (-0.47%) AAPL 124.08 (-1.41%) MSFT 231.45 (-0.78%) FB 261.31 (-1.71%) GOOGL 2,053.96 (-0.30%) AMZN 3,155.00 (-1.24%) TSLA 726.68 … On Monday, shares of Target (NYSE:TGT) saw unusual options activity. How do I find and scan for unusual options activity? Click "Screen" on the page and the Options Screener opens, pulling in the symbols from the Unusual Options Activity page. Remove the noise and zone in on what truly matters. At first glance, it would appear that some built a $176K position anticipating that $ROKU would see a move above $99.50 within two weeks of the purchase date. If you are not familiar with listed options, they are labeled as either “calls” or “puts.” A call gives the buyer the option (or right) to buy the stock at the expiration date (usually 100 shares) at the purchased strike price, while puts give you the option to sell the stock. As of today, if Cabot Options Trader subscribers bought 10 UNP January 120 Calls for $8, they could sell the last piece of the position for $23 or a profit of $1,500 per call purchased. If you’d like to join them, click here. While I’m not a fan of UOA for my main trading plan, extremely profitable situations can arise from such scenarios. You will receive a new password via e-mail. There’s a litany of scanners/screeners that scan for unusual options activity, and most trading/charting platforms have this capability built-in. Looking a little closer, the $ROKU back to back sweeps stands out. Now, once you find the stock trading unusual options volume, and have identified the contract where the “action” is, the next step in the process is to see if the activity is opening buys or sells, and this can be tricky especially with options trading tight spreads. Several viable platforms are available, but my favorite by far is Cheddar Flow. What occurred immediately after the close was a positive report in regards to guidance that saw a strong breakout and follow through move on several gap ups in coming sessions, taking price far above the $99.50 strike. It is very common for these institutions to position themselves in advance of a pending news announcements, such as a buyout or bankruptcy, that may not have gone public yet. I strongly urge you to do some homework before ever considering selling either calls or puts. Find out how in this free report, How Options Work—and How to Hedge Portfolios with Options. FlowAlgo alerts you as notable orders take place on the stock and equity options markets. Another option for how to find unusual options activity is with a scanner like Trade Ideas. When examining unusual options activity (specifically call buying), I am looking for these signals: When the call buying in UNP hit all three of these signals, I sent the following trade alert to Cabot Options Trader subscribers: Buy Union Pacific (UNP) January 120 Calls (exp. Following the unusual option alert, the stock price moved down to $10.85. 176 North Street, Salem, MA 01970 Learn how to find stocks with unusual options activity. Today's Unusual Options Trades| Unusual Options Activity Scanner. Fax: (978) 745-1283 I am setting my mental stop at our original buy price of $7.65 on the balance of the position. While this window won’t give specific strikes and expiration dates, it gives notice to some of the unusual options activity … As I highlighted yesterday in Stocks on Watch, a trader on Wednesday bought 137,500 Union Pacific (UNP) March 130/150 Bull Call Spreads for $0.62. How To Find Unusual Options Activity. I will hold the balance of the position for much greater upside. OptionsHawk is the first, and best, site to provide real-time analysis of Institutional and Unusual options trades. Also yesterday, there was a buyer of 2,000 June 130 Calls for $1.42. Those same 1,000 contracts traded on a less liquid name would certainly be a more significant. For our 20 th episode of “How to thinkScript,” we’re going to be building 4 scans all designed to help us find some high probability trade setups, that are happening with unusual volume opportunities.. These insiders will use the options market to make very large bets to profit on the leverage that options provide. Look to see if the trade took place at or above the ask price. Implied volatility (or IV) displays the overall expectation of future volatility. Pulling up the 1 hour chart and seeing when this took place, it was an inverse head and shoulders breakout. Cabot Heritage Corporation These institutions want to hold onto the shares of stock they hold. Find out more. The volume should exceed the prior open interest, which indicates the activity is a new position rather than a liquidation. Unusual Option Activities on Stocks. Log In Sign Up. And while it’s not fair that these hedge funds may have insider information, there is nothing wrong with me following them into trades. 2019). If shares of the bank drop back to the $7 range they often hit, this $10 put could go to at least $3, offering more than a double for buyers.. Shares of BlackBerry (NYSE: BB) saw some unusual options activity on Friday. However, when you buy either, your downside is always limited to your capital invested. The smallest of the two trades was therefore six times what was sitting in open interest. Once considered a niche segment of the investing world, options trading has now gone mainstream. 3 Unusual Options Activity Signals. And then, the stock continued to rise, and I continued to raise my mental stop higher and higher. Beginners and experts alike can gain from following Jacob’s advice. Pull up the chart for yourself. They were out of the money, and a thinly traded contract with only 37 in open interest at the time. If volume exceeds OI, you know that someone is opening a new position, which has far more informative value than that of a closing one. 2019) for $8 or less. While this certainly won’t occur in every scenario, it goes to show the power that unusual options activity can provide and how valuable tools like Cheddar Flow can be. A couple of days later, I sent this trade alert to sell half of the position: Sell Half of Existing Position: Sell HALF your Union Pacific (UNP) January 120 Calls for $10 or more. Email: support@cabotwealth.com. Yet many "options guru" pretend to build a whole "secret system" around this phenomenon. A call buyer takes on a bullish bias, while a put buyer takes on a bearish bias. Try Two Weeks for $37. For example, large out of the money option contracts with near dated expirations may … So, when a stock’s volume has increased tremendously and has a week left... Pay attention to catalysts—there are two different types of catalysts you’ll want to pay attention to: That leaves a lot of “noise out there.”. Now, if you don’t know, unusual options activity is simply above average volume on a particular stock option. This longer-term positioning is extremely intriguing to me, and I am going to add UNP to the portfolio. By: Thomas Metcalf . Required fields are marked *. While my intention was to hold this position for quite some time, I am going to stick to my usual plan on selling half for a quick 30% profit. Using options as a predictive indicator is more effective when applied to individual issues, rather than to broad indices or the market as a whole. A strong strategy for retail traders is monitoring regular options order flow (not just UOA) to spot what “smart money” is doing and follow along in the most profitable way possible. Such a trade would indicate that the buyer was very aggressive, and willing to pay the premium price to execute the trade. Figure out “what would cause them to take such a large position here?” Trade it for yourself, with smart money as your reassurance. The average sized trade for that particular name must be compared. My most successful strategy throughout my 18-year options trading career has been using my unusual options activity scanner to find the next hot stock. It includes stock options bought on the ask or sold on the bid with unusual size and daily volume compared to open interest. I've been watching that page for a while (several months) to see how various underlyings perform after being listed as having unusual activity and I can't seem to figure a way to use it. Literally hundreds of thousands of options orders clear every day. Unusual trading volume exposes stocks that are being traded at an unexpectedly high level. After the first year, your picks, net of sales, were up 38%. Related reading: TraderMentality’s in-depth review of Trade Ideas. Unusual options activity (or “UOA”) can be a “giveaway,” so to speak, that there could be a large move in the underlying stock in the near future. The premier site for active option and equity traders, providing the fastest, most thorough, and accurate options analytics in the industry. It seems like a lot of analysis to perform on one trade, but options order flow scanners can handle all of this for you in a very streamlined way, taking out a lot of the guess work. The letters in the acronym stand for open interest, chart, risk, reward, breakeven, time, and target. However, trading UOA can be tricky. With little knowledge on the best strategies, you can use options to work the odds in your favor and make trades that have up to an 80% probability of success. Phone: (800) 326-8826 To narrow the list down by expiration date, use the "Days to Expiration" filter in the screener. Tips to Finding Unusual Options Activity All options trades have an expiration date. Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools: Best-in-Class Portfolio Monitoring. Pulling up Cheddar Flow, filters can be selected that eliminate trades that are not relevant – in this case we’re looking for unusual orders. While these setups are not a 100% guarantee, they can lead you to find hidden gems in the market. Discover the hottest stocks, investing tips and analysis from Cabot analysts in our free Cabot Wealth Daily newsletter delivered right to your inbox. How To Find Unusual Options Activity? How so? 4 Simple Steps to a Personalized Sizzle Screen Using the Sizzle Index as a personal scanning device for unusual options activity can be done in four steps: scan, compare, refine, and save. Scanning for unusual options activity means that you need to identify big options trades that are: Speak for aggressive buying based on trade execution Unusual volume relative to the overall value of an underlying stock Options traded relatively high compared to the open interest. FlowAlgo alerts you as notable orders take place on the stock and equity options markets. The Dividend Solution—How Dividend Stocks Have Replaced the Bond Market. After evaluating unusual trades with this plan you will be able to decide if you want to follow it or ignore the trade altogether. As an example, 1,000 contracts traded in an $MSFT option would not be considered unusual, since Microsoft trades much more than that on a daily basis. Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. What unusual options trading activity means. The first—and perhaps biggest—challenge of options trading is understanding what an option is. FREE WEBINAR: Thursday, March 18, 2021 at 2:00 PM ET with Tom Hutchinson, Chief Analyst of Cabot Dividend Investor, Cabot Income Advisor and Cabot Retirement Club. This means that if you see unusual options activity, it could be because a large hedge is taking place, as opposed to someone expressing a directional view. Your email address will not be published. He uses calls, puts and covered calls to guide investors to quick profits while always controlling risk. They carry less overall risk, but won’t see gains near as quickly as weekly OTM contracts. Read more about time related options trading in The Value of Time. And this morning the stock is up another $1.50. Analyze what you see. unusual options activity; I'm asked many times if we can use unusual options activity to make some good profits. Is the GME Short Squeeze a Black Swan for the Market and Hedge Funds? Unusual options activity (UOA) many times is a ‘tell’, a signal that there is a likelihood of a potential large move in the underlying stock. “In the past 24 months, you recommended 24 stock buys and 14 sells. The predictive approach toward options activity says this information may actually reveal what the “smart money” is doing. These insiders are often referred to as “smart money.”. Note : ALL the symbols from the page are pulled into the screener. This strategy of selling half, and then letting the remainder of my position ride for a home run, while raising my stops, has been my most successful strategy for managing winners. Simple, every option contract traded on a stock has volume and open interest. While this window won’t give specific strikes and expiration dates, it gives notice to some of the unusual options activity names for the day as they come in. Trade Ideas is evolving their options related tools on a daily basis, so watch for changes moving forward. What is unusual options activity? Sell to Close HALF your UNP January 120 Calls. Trade Ideas is evolving their options related tools on a daily basis, so watch for changes moving forward. The options channel on the channel bar features many options windows, including “Somebody Knows Something” shown below. Another option for how to find unusual options activity is with a scanner like Trade Ideas. Look for an increase in trading activity and an increase in open interest. And right now, Cabot Options Trader subscribers have executed a similar strategy, and have sold half, and are letting the remainder of their positions run, in CSCO and ETSY, going for even more home runs in 2017/2018. Pronounced “Oak Ribbit,” this trading plan will give you a step-by-step method for breaking down unusual option activity. Two week trial offer ends July 15th. I hope you now understand how to find unusual options activity, and develop a strategy for executing upon it. Creatas/Creatas/Getty Images. Contracts that are further out give you more time to adapt, wait for key entries, adjust charts, or add/trim. However, because they’re trading their clients’ money, they don’t want their clients to withdraw their investments out of fear. The bull market of 2017 has produced many great trades for Cabot Options Trader subscribers. Here is the chart of UNP since the call buying began: And now today, with the call worth $23, that stop is set at $18. Why I Love SONO Stock, but Hate my Sonos Audio System, This PTON Stock Call Buy was the Greatest Options Trade I Ever Made, Privacy Policy, Terms of Use & Premium Service Terms & Conditions, Free Report: How to Hedge Portfolios with Options, VIDEO: Cautious on Growth Stocks | Cabot Weekly Review, How Options Work—and How to Hedge Portfolios with Options, How to Invest in Stocks and Other Investing Basics, Large amounts of money put at risk by the call buyer. Never take a trade simply as a result of smart money activity. This is another valid method you can use for how to find unusual options activity. The process of breaking down valid unusual options activity can be daunting. Simply set the filters above based on your own trading criteria; like days to expiration, moneyness or total amount traded. Note I said “typically”. High Options Volume for December 31, 2020. by ORATS | Dec 31, 2020 | Unusual Activity. More specifically, the volume should be at least 3 times the average daily volume, focused on near-term options and 1 or 2 strike prices. UOA is typically sparked by hedge funds and institutions, as they trade the options market regularly with very large trades to gain profits on the massive leverage that options can provide. Use MarketBeat's free options scanner to view stocks with unusual put volume activity on the most recent trading day. When you sell either, downside can be infinite (similar to short and long trades). When a lot of money is flowing into a security or option, that typically means institutions feel really good about it. Buy to Open January 120 Calls (exp. Our big scores in Micron (MU), Visa (V), Microsoft (MSFT), Symantec (SYMC), Cisco (CSCO), Etsy (ETSY) and Union Pacific (UNP) were all found via unusual options activity. Using Unusual Options Activity The other day u/CoquettishValley asked about Unusual Activity scanners , like the ones available at BarChart . Although UOA is tricky, using this strategy can see potential gains that are ridiculous. We were filled on the sale order, for even greater profits of 42%. "There is always another trade setting up", So you want to know how to find unusual options activity? Roughly 4 times the normal volume would typically qualify as unusual. Always following the big money could certainly lead you astray. Find the last sale price, share volume, and percent changes of unusual volume stock at Nasdaq.com. Jacob Mintz is a professional options trader and Chief Analyst of Cabot Options Trader. Before getting into the specifics, familiarize yourself with the Stock Hacker screen, located under the Scan tab in the thinkorswim platform (see figure 1). What makes it so unique, unlike watching stock order-flow, is that we can identify if these are opening positions (new trades). Sentiment: NEUTRAL Option … The accumulative total after 24 months is up 56%.”, Copyright © 2021 Cabot Wealth Network Then, yesterday late afternoon, a trader bought an even bigger position premium wise. The option activity takes place in absence of any known or substantiated news event, such as an upcoming earnings report. This write-up will touch on calls, and how to find unusual options activity. Space is limited so sign up now for FREE. Learn how to find stocks with unusual options activity. Real-time Option Order Flow. 2019) for $3.56 ($21 million in premium at risk). This informed activity is usually initiated by hedge funds and institutional traders. Therefore, an increase in implied volatility is a more valid trade signal than a larger order that has a lesser impact on IV.