Does option option trading can get you insight into short-term direction of market or it tells whether market is bull/ bear or if certain stock should be shorted in short-term, by looking at option chains, open interest and other attributes? Thank you
I don't think so. There are option strategies that involve simultaneously buying/selling calls and puts. Straddle / strangle Credit and debit spreads Covered call The above positions don't give any insight into the direction of the market when looking at the open interest.
What you are looking for, is to view the PUT/CALL ratios. Or CALL/PUT ratios. At one time, odd-lots was another thing a lot of traders used to swear by, but it's fallen slightly out of fashion. The theory is, only dumb-retail will go for odd-lots, and statistically, they lose out to the smart-money in the long run.
For people with insider information, they may buy a lot of OTM calls or puts. But you still have to guess as too often insiders also lost money.
I look at open interest relative to key points on the underlying chart - I take a little bit of notice of supposed support and resistance, prices tell me more about concensus. Good luck (luck is inestimable as a skill!)
A A high implied volatility (IV) tells you that the market is expecting a big move either side. For instance you see high IV before earnings.