Unusual Options Activity

Discussion in 'Options' started by qlai, May 25, 2020.

  1. qlai

    qlai

    I found below presentation interesting. Would be curious what others think about this approach.

     
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  2. guru

    guru

    I think this is currently one of the most popular options strategies. I've seen dozens of traders messaging about buying most popular options, and there were several news articles about crows of retail options traders (especially on r/wallstreetbets) starting up call buying frenzies that further fuel those popular options, and force the underlying to move up as well so that it works by default. (until it won't). Basically many options traders are now monitoring unusual options activity.
     
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  3. SanMiguel

    SanMiguel

    Force the underlying to move up?!
     
  4. guru

    guru

    Due to MMs needing to buy huge volumes of shares to hedge.
     
  5. guru

    guru

  6. guru

    guru

    https://www.bloomberg.com/news/arti...reedy-traders-are-shaking-up-the-stock-market
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    Market makers, like good bookies, don’t want to go out on a limb. When taking a bet, they lay off the risk. If someone buys a call, for instance, speculating on a rally, the dealer buys stock in the underlying company. If the stock rises, the dealer may have to pay out on the option—but that’s offset by the gain on the shares.

    When shares keep rising, managing the hedge entails buying more stock. That’s where the Reddit set perceives a weakness. A favorite tactic on r/WSB is to swamp the market with call purchases early in the morning in an attempt to force dealers to keep buying stock. Up and up everything goes—supposedly. As the stock price rises, so does the value of the calls, often by far more.
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  7. SanMiguel

    SanMiguel

    They can also offload the option. Depends on volume. They want that option to expire worthless
     
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  8. guru

    guru


    Possibly, I guess if there are are sellers that MMs can buy them back from, but when the "buying frenzy" was started by the mob then by default it means more buyers than sellers?
    Though I only meant/wrote there were several news articles stating this (and cited them above).
     
  9. qlai

    qlai

    I’m thinking of trying his monthly subscriptions to winning picks. I would be surprised if his picks don’t cover the cost. How difficult is it really to pump one or two of own picks to generate returns? Not saying he does that, but business is business.
     
  10. guru

    guru


    Depends what type of stocks, but he wouldn’t be able to pump any large cap stocks.
    While I’m also curious if those subscriptions may be worth it, so if you do subscribe - let us know whether it’s worth it :)
    A while ago I was thinking about subscribing to similar signals from Davis Martin of Daily Profit Machine. I don’t like his association with Raging Bull, but I do think he is a hard working guy who researches his stuff very well and his picks could be valuable.
     
    #10     May 25, 2020
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