How to Profit From Unusual Options Activity - Complete Guide

Compared to the normal activity on that contract and compared to the activity on the rest of the options chain, the number of irregular options is because the frequent activity on an option contract is much greater. Higher activity means that this stock and especially this option contract are now being paid attention to buy more advanced traders and more market makers.

As these players work diligently to retain their market edge, the number of uncommon options acts as a 'footprint.' It helps you to realize that something about this commodity is interesting, and it might be useful to check into it and 'ride' with the players in the trade.

There are more than 4,000 stocks of options and more than1.1 million options. A few transactions a day are sold for certain futures, although tens of thousands of others exchange every day. How do you know if it is odd for an activity?

Option Samurai helps you to account for this by scanning the volume, stock volume, options volume vs. open interest, etc. according to intraday options. You can adjust the scans to suit your needs, but we believe you can start with and go from the predefined scans.

How do you calculate potential profit on options?

Buying call options is a leverage-based bullish tactic which is a risk-defined alternative to purchasing shares. Call options presume that, after the acquisition of the options contract, the broker plans to raise the stock price. The stock price needs to rise more than the strike price and the options premium together, for the trader to benefit.

How Do Call Options Work?

Here is an instance of a call option purchase:

·        A broker is very optimistic on XYZ stock trading at $50.

·        The trader is either risk-averse, preferring to know their maximum loss beforehand, or needs higher leverage than actually holding XYZ shares.

·        The seller predicts that in the next 30 days, XYZ will move past $53.10 per share. The broker takes the strike price of the$52.50 call option that is selling for $0.60.

·        The trader can only purchase 1 option contract with this case (Note: 1 contract is for 100 shares), so the net cost will be$60 ($0.60 x 100 shares/contract).

For the call option, the following is the profit/loss graph at expiration

Why Follow Unusual Options Activity?

We all love methods for sales expenditure that can produce steady monthly profits, correct. And why? From utility bills, cable and phone bills, and more, we have monthly bills to pay. It is therefore very vital to create numerous income sources.

Trading stock options is a stable gain in revenue that will guarantee you a healthy income. You've taken the requisite steps at this stage to start saving.

Even, if you follow unusual activity options, you can. Today, this is not a specific investment strategy, it's just a word used to describe stock options with a volume larger than normal.

So how do we find out the perfect noise-trades? We use an uncommon scanner with operation choices. Many scanners/screeners are available that search for suspicious activity options, and many trading platforms have this feature integrated into their platforms.

It's pure imagination at the end of the day, but here is what you are looking at:

·        Volume, the opening position, should be greater than open interest.

·        Orders should be on the issue line, occasionally you can find those that are above the price you ask for.

·        As they are most likely a bet on earnings, avoid orders that have the earnings month

·        Relative size is more important than real size; it's worth looking at something over 5X


Unusual Options Behavior describes options transactions that sell at a greater volume compared to the open interest of the contract. Unusual options may show insight into what "smart money" does with high-volume orders, signaling fresh positions, and likely a significant change in the underlying stock or ETF. When a call is bought at the asked price, options can be called bullish and options can be considered bearish when a call is offered at the bid price.