You can think of unusual options as someone on the trading floor in the 1990s screaming to buy Microsoft ($MSFT) stock over and over all day, they continue to buy the stock/options as the price increases, this would’ve been referred to Unusual Options Activity or Unusual Activity in general also referred to as (UAO).
When a large amount of activity started to show up for an option it would spark interest of others which would in turn have others pile and piggyback the initial trade. This would further propel the stock in that direction.
Now a days we don’t have large trading floors as we did back in 1990, all we have is our computers and laptops with the ability to pull up unusual options activity scanners such as SweepCast to look at trading data that comes through.
If the volume has always been unusually low for a stock such as $BB (Blackberry) but all the sudden you see option activity starting to increase substantially this would be called unusual options activity. The pure definition of Unusual Option Activity is when a option trades at a higher volume compared to its norm. The type of activity most are looking for are Call Sweeps and Put Sweeps.
Not all unusual option activity is meaningful because at times some traders are taking a large hedge against the shares they own, but at times there could be some information they have about the underlying stock which could prove out to be a large move and this is why traders love following the smart money.
The easiest way to follow unusual activity is through a platform such as SweepCast.com because this helps curate the data and filter down based on unusual parameters. Otherwise this could become an impossible task in trying to find and filter data all throughout the day.
The best method to find a trade there is looking for a direction is to look for multiple sweeps coming through on the same call or put option with the same expiration date. This is letting you know that the trader is indicating a large intention to purchase this option contract over and over even if the price of that contract is increasing. Remember some of these trades even in SweepCast hedges against positions but you are trying to use your skill sets to narrow down even further what is the best trade to take, SweepCast will get you towards the finish line!
Traders use unusual options activity scanners as a supplement trading tool part of their information resources, as SweepCast is a low-cost high return stock market platform that provides traders great insights on where smart money is flowing. Unusual and Options Activity can provide you great direction on a stock because this is where actual money is flowing into.
SweepCast Unusual Options provides all of the tools needed for you to follow the smart Money. The platform was also featured in Benzinga as it helps retail traders and is affordable in pricing to understand option order flow.
Furthermore if you want more assistance and learning about options in starting from the basics you can always work with our partner PineappleStocks.com who uses Sweepcast.com on a daily basis.
You've learned enough about Unusual Options, now try it out in your everyday trading!