Spy put volume and open interest

[raf_bcn]

Hi

Yesterday the Spy 290 put for the next monthly expiration had a volume of almost 50 k and the Open interest was 13.1 k.
Today the Open interest is 13.2 k
So the OI only increased by 100 , but there was a high volume. What do you think it was that volume, people buying and selling at the same day?
I have observed the same dynamic for some days.

And another thing, I was short some of these 290 puts, not much, and I was early assigned. But the OI increased from one day to another.

thanks

 

[OptionsOptionsOptions]

• I always thought the Volume was added to the Open Interest the next day.
• I find it hard to believe that 50K volume consisted of an equal split of buying and selling.
• So maybe other factors affect the Open Interest?

 

[tommcginnis]

The ES and the SPX behave similarly to each other.
I would have a problem believing that the SPY behaves any differently to them.
Here is a shot of last night's closing puts and calls, volume and open interest, over 71 strikes from 2550 to 2900 inclusive.
Since this is the ES, it includes the overnight of "Trading Wednesday," so 1800hrs ET Tuesday through 1600hrs Wednesday.

With these numbers, I'd conclude that you're misplacing a decimal point or two.

On further checking, IB's TWS OptionTrader shows the Jul20 SPY 290 put OI at 13.2k right now -- but importantly, no strike around it comes close. But Lo! Take a look at the open interest in calls. Hmmmmm.

 

[truetype]

Volume can be opening or closing transactions. Hence OI can rise or fall, regardless of high or low volume. If a long & a short both liquidate their positions (by trading with each other), that creates volume, but reduces OI.

 

[rb7]

These are basic concepts of option trading.
Better understanding them before going forward.
Just my 2 cents.

 

[raf_bcn]

Hi

I always thought the Volume was added to the Open Interest the next day.

In my opinion only the new open transactions that remained opened at the end of the day are added to the OI.
The volume is different, every transaction is added to the volume.
So if someone opens an close in the same day, that's a volume of 2.

With these numbers, I'd conclude that you're misplacing a decimal point or two.

I don't know the behavior of SPX and Es. These graphs doesn't show the volume or OI per Strike. I am talking about ITM puts strike 290.
It is strange to have a volume of 50 k in itm options. And also the fact that that volume hasn't increased the open interest.
The same strike calls are otm so they have a larger volume and OI.

If a long & a short both liquidate their positions (by trading with each other), that creates volume, but reduces OI.

So, your opinion is that there were 2 parts that opened and closed the positions with each other in the same day. That is what I was asking.
50 k options volume , that is a 25 k net position. That 50 k options didn't increased the OI, well only by 100.
But the strange thing is why I was early assigned ? When there are early assignments they also reduces the OI. But the OI increased from one day to another.

What is the probability of 20 options being early assigned when there is an open interest of 13.1 k ?




@rb7 thank you for your cents.


Thanks.

 

[OptionsOptionsOptions]

• I always thought the Volume was added to the Open Interest the next day.
• I find it hard to believe that 50K volume consisted of an equal split of buying and selling.
• So maybe other factors affect the Open Interest?

So if someone opens an close in the same day, that's a volume of 2.

That's correct ...... and open interest stays the same.

 

[OptionsOptionsOptions]

These are basic concepts of option trading.
Better understanding them before going forward.
Just my 2 cents.

Understanding how Open Interest and Volume is calculated isn't important to option trading. It would be interesting to know - but not essential.

 

[tommcginnis]

Understanding how Open Interest and Volume is calculated isn't important to option trading. It would be interesting to know - but not essential.

Knowing vector calculus equations is not essential to walking across a street, but if you don't know the fundamentals, you will get killed. No different with a myriad of detail in trading, whether it's how your mouse operates, or what it means to have the SECTreas tell a major trading partner, "Hey, we're good!" C'mon, man. Thimk.

 

[OptionsOptionsOptions]

Knowing vector calculus equations is not essential to walking across a street, but if you don't know the fundamentals, you will get killed. No different with a myriad of detail in trading, whether it's how your mouse operates, or what it means to have the SECTreas tell a major trading partner, "Hey, we're good!" C'mon, man. Thimk.

You can still drive a car without knowing what's going on under the hood.