hey guys I'm new to options and still learning basic strategies. For now Im sticking to buying simple long calls that have unusual volume and large block trades. I do a ton of research on the company after a block trade or unusual volume has been announced and then decide if I want to jump in on the action... I get my info from a few different websites. Does anyone else here just buy long calls and follow where the money is going? Also is there anywhere to find open interest/ volume history by day? thanks!
historicaloptionoptiondata.com (deltaneutral.com) eoddata.com These two paid services offer it. I have subscribed to them both, but haven't looked into the accuracy of their open interest numbers other than a quick look at one stock just now to see that the results seemed plausible (that is, mostly zeroes, except for a few that I had noticed earlier in the day). http://www.historicaloptiondata.com/structure warns "Open Interest â always a day behind. The OCC changes this number at 3:00AM every morning and the number does not change through the day." From writing little programs to comb through this data, I know that both of these services have occasional errors, which I also often see on TD Ameritrade, usually what I suspect was stale data from incomplete implementation of an InfoMemo from Options Clearing Corporation.
Looking at unusual volume can be ONE thing to look at, but it's certainly not definitive by any means. The reason, is that you may not know whether the trade is opening or closing (unless it's clear from the open interest change), and you also probably don't know if the options are traded against stock or another option position.
Hey guys I'm still learning more about option strategies but I must admit its taking me a while. Im sticking to buying simple long calls. i look for unusual trading activity such as block trades and then after I do my research on the company and see what could be the reason for the block trade. I watch the volume and OI everyday and then I decide if I should make a move. Every time there was a block trade made on call options that I was aware of, an announcement was made on the company with good news and the calls doubled or quadrupled. A few examples recently: MSFT, VOD, QCOM, TESLA - all had major call buying before they issued good news. I think its sort of a gamble what I do but still a great way of making money. Anyone else here trading this way? Notice any unusual volume you would like to share?
There are some studies that indeed shows volume and OI contains information not found elsewhere. One is from 2004 in Indian equity markets, found here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=695745 I actually replicated the above study in Excel some ages ago, I remember trying it on stocks like AAPL & GOOG, but didn't bother gathering any conclusive data on it's profitability. From the few tests I did results seemed random so I didn't bother with it anymore. To the OP, you say you do a ton of research on the company after spotting such trades (how do you scan for them?). I'm a lazy son of a bitch and I absolutely hate doing fundamental research on single stocks (it's all so damn subjective and non-quantifiable, at least that's my impression, then again I'm clueless on such matters), but maybe this is where the key is.