volume spike AAPL

Discussion in 'Options' started by SCI new york, Aug 27, 2009.

  1. for anyone who trades aapl, volume spike in the october 200 calls today, conference next week and china unicom deal details will probably imminent.

    ive been long and think its going much higher. going to roll out of these soon and buy the january 200s
  2. Volume spike so a lot of people where in shorting the calls huh, they think its going down huh?
  3. dmo


    In other words OP, what makes you think that volume was driven by call buyers? How do you know it wasn't a mad rush to sell those calls at any price?

    If you saw a big volume spike in AAPL stock, would you assume that it was AAPL buyers driving the price of AAPL up? Or would you actually look at the price first to see if it had gone up or down?

    In the case of options, the "price" you need to look at to see if volume was driven by buyers or sellers is the implied volatility. As it happens, the IV of the calls you mentioned is slightly down from yesterday. So much for the theory that the volume spike in those calls resulted from an imbalance of bullish call buyers.
  4. implied volatility isn't the only indicator to look at when trading options. and since there is no real way to know if there are buy or sells i dont follow that as much as say open interest. The amount of open contracts have increase for the last 2 months by nearly 100%. i'm willing to be that its not poeple opening sell order calls.
    Traded over 4k contracts yesterday and then today the announcement for the china unicom deal is out from CHU.

    So congrats on being wrong. I hope you sold calls.
  5. So people did the synthetic put, bot calls and shorted the stock. The point I was making is volume spikes in options are meaningless since you dont ever know what they did with the options or if they are

    buy to open
    buy to close
    sell to open
    sell to close

    what underlying trades were made with the options or if they are part of pairs or dispersion trades or some other strategy.
  6. It never ceases to amaze me that the newbie trader - who is first learning about OI - is unwilling to listen to anyone on the topic.

    I guess it's bliss to assume an OI increase means buyers rather than sellers. It's the same bliss that ignores any potential hedge made by the people who trade the options - such as the reverse conversion.

    And here's one more amazing statistic to be cherished by the newbie: As time passes, OI increases. Imagine that! Does this suggest every option in every stock should be bought because OI increases over time?

  7. Well of course you should! OI increases in a bull market! Everyone knows that.

    When a new option series is added during a bear market, OI starts at zero and declines to negative numbers. That means everyone is selling!!!!

    :D and a (wink)
  8. Please don't read too much into OI and Volume of options.
    Pay more attention to the underlying and IV/SI ratio.

    Options OI and volume is much less useful than underlying trading volume.
  9. well bottom line is they signed the china uniocom deal and CHU bought 5 million phones to start. i think its going to bode very well for apple
  10. I am sure thats been priced into the stock for a while since the rumors have been around.
    #10     Aug 29, 2009