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OptionFlow — 3 Comments

  1. >>> For this reason I opted to distinguish whether a trade entered the market “at”, or “above” the ask. Indicating that most likely it’s a buy of the contracts.

    I’d like to add:

    It’s a desperate buy to get into the action NOW, and not set a bid & wait for it to get hit. That is the greatest indication of a strong belief in the direction of the move, especially considering how much capital is put at risk on these trades. However, not all these bets pay off, so still use only as a guide, not a fail-safe trigger to follow

  2. Absolutely. It’s a “tool”, and should never be followed blindly. Since the bid/ask spread on high beta’s are very thin; SPY and IWM, usually just 1 or 2 pennies, I don’t see a large trade at the “ask” as a desperate buy, but rather a “want to make sure” to get the trade.

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