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

[philpsw]

The numbers are changing a lot in the stock market, it is not advisable to invest right now!

 

[tommcginnis]

The numbers are changing a lot in the stock market, it is not advisable to invest right now!

But if you *do* invest -- only buy stocks that are going up.
(That's my advice, anyway. I mean, you know, "YMMV" and all of that...)

 

[arturo100]

Hello,

Once in a while I will see a very high number of open interests, like this:

14
64
3240
134
4

In the above example, 3240 jumps out on a particular strike price/date that is way above the normal amount of open interests for that stock. This gets me to wondering if the smart money knows something. You can look over several weeks of closing dates and prices, and a particular date/strike price jumps out as way more than normal.

High open interest means that there is....interest in the underlying. If it is long or short interest depends on the trade, i.e. if it was on the bid or the ask. To know this you need to have daily times and sales. Also, as someone already reported, these transactions can be part of a bigger trade or even hedging of an opposite direction stock trade.

 

[Handle123]

And after hedging long stocks by selling S&P futures, if they are very good at hedging and market timing, they can sell twice as many S&P futures looking for overall profit and hedging that position with options. Some would ask why not just dump the stocks, if you been sitting on them since 2009, you will incur a needless tax situation next year, plus in meantime dancing option plays around the stocks would have to be unwound, and loss of dividends. So just easier to hedge with futures.