Unusual Options Activity
- Thread starter qlai
- Start date
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.
Force the underlying to move up?!
Due to MMs needing to buy huge volumes of shares to hedge.
https://www.cnbc.com/2020/02/22/cra...plicably-higher-a-late-cycle-market-sign.html
"Crazy speculative trading is driving some stocks inexplicably higher"
"Crazy speculative trading is driving some stocks inexplicably higher"
https://www.bloomberg.com/news/arti...reedy-traders-are-shaking-up-the-stock-market
=============
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.
=============
=============
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.
=============
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).
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.