Does a huge amount of open interests mean the smart people know something?

A good portion of the large trades in options is not related to directional plays. Search the term qualified contingent cross and you see most of the trades over 1000 contracts relates to:
1. A volatility play
2. Interest/dividend play
3. A structured product which could be a directional play or an interest dividend play - so more homework is needed.
4. Tied to stock both long and short.

BTW sometimes it is a directional
 
sle said:
There is information in it, but it’s a bit of work to unravel what exactly it means. Can’t say much more about it, for obvious reasons
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Ditto.

Big open interest at a particular price mostly means there are "lots of players on both sides... each equally convinced the other side is wrong."
 
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Scataphagos said:
Big open interest at a particular price only means there are "lots of players on both sides... each equally convinced the other side is wrong."
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That’s not exactly true. A delta hedged player and a directional player might be on the opposite sides and both can be right (or both can be wrong).
 
sle said:
That’s not exactly true. A delta hedged player and a directional player might be on the opposite sides and both can be right (or both can be wrong).
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So... how can you tell which is right and with whom you should place YOUR bet?
 
sle said:
Well, that’s where the gold is buried :)

PS. I LOVE your puppy!
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If you knew his favorite "toy" is the toilet plunger, you'd love him even more! :)
 

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Some marvelous hints of verticals and calendars around the major strikes....
But to infer motive??? Wooo! Not me.
I'd restrict myself to observing what such risk buy-in and sell-out could do to other movers -- options are, remember, insurance.

wkSPX11eOpenInterestCapture1215eod.PNG
 
stockmarketbeginner said:
I was thinking the following: if you had an idea to buy an option, and you see a *lot* of people taking an open interest on that exact same date/price, then maybe the smart people are thinking what you are thinking, but they have even better info and skill. So you kind of copy the good ideas of the smart people.
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Smart people?? You are thinking that big equals smart, aren't you? What if GS and CS are the buyers and MS and ML are the sellers. All are big, but only one side will be right, this time.
What if GS is the buyer and somebody's Granny is the seller. Is it a foregone conclusion that GS will be right, and the smarter one?
Also, if big equals smart/right, please consider the following post I made on another thread.
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There they are, the big banks and brokers, with all the information in the world at their fingertips, an analyst for everything, a room full of guys with a PhD and a BB, AI, algos galore, and they still have to manipulate prices to make money!!
They should fire the analysts, cancel the BB, delete the algos, and just hire all the great traders here on ET!!

http://www.fxantitrustsettlement.com/
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Don't worry what THEY are doing. Learn to read the trend and you will be one of the smart people!!
 
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