These leveraged equity instruments give someone the right (but not the obligation) to buy or sell a security at a specific price on a specific date. Starting in November 2020, we started flagging buying in GLUU, with activity in March and June. In Follow the Smart Money, Jon and Pete Najarian will teach you how they trade unusual option activity every daystep-by-step from identifying the trade, to confirming if it is unusual, to choosing the right options strategy. SEIZE CONTROL OF YOUR FINANCIAL DESTINY - Get a . And these are exactly the times that they may be active. For example, around some major news events, the implied volatility measure may prove less important. Three Keys to Identifying UOA. Unusual options activity is an order flow strategy. : I especially enjoyed the chapter on The Greeks, which I thought was a thorough and clear explanation, and the relatable comparison of a call option to a rain-check. Reviewed in the United States on June 6, 2020, Reviewed in the United States on April 1, 2021. In the options market, thats a trade that stands out so much you cant help but notice it; a trade or, more frequently, a series of trades with essentially no reasonable explanation other than someone must know the stock price is going in one direction or the other. Learn more. This volume was far higher than the open interest meaning this position was a new opening trade. Rebels Edge 01-09-23. Insiders offer one easy explanation for the source of unusual options activity. For example, around some major news events, the implied volatility measure may prove less important. With the stock trading below $9, there was buying of at-the-money calls. All Rights Reserved. But, you should also realize that this is still a probability-based analysis. If a trade is a large notional dollar amount, traded on the offer, with high volume that exceeds open interest, well out-of-the-money, and a small likelihood of the price naturally reaching there as it relates to implied volatility, then that trade is certainly unusual. The orange dots indicate what we call unusual unusual options activity. Rise and shine with a fresh cup of the hottest premarket news and biggest early-morning movers each day all in one rapid-fire minute with DRJ himself. And to do that, they have to try to mask their activity. It is written in easy to understand language and filled with real life examples and spot-on analogies. It tells you almost nothing about investing and and gives them a chance to BOMBARD your Email inbox with get rich quick(FOR JOHN AND PETE)) offers. More than 10,000 contracts of the October $15 calls were traded for 20 cents in the first half of the session. We think about how the trade will perform as the price of the stock moves and time decay sets in. Whether we're talking about thousand-dollar donations to food banks, tables-full of video game. On the opposite side, it doesnt mean that a large trade executed on the offer with a close expiration date is unusual. Around 3,000 contracts of the October $19.50 calls in Under Armour Inc Class A (NYSE: UAA) were traded in the first half on Wednesday. There are a number of ways that a trade can be unusual: volume, open interest, the date of expiration, the strike price, and the price paid. By clicking below, you also agree to our Terms of Use and acknowledge our Privacy Policy. Benzinga does not provide investment advice. 'Fast Money Halftime Report' Traders Weigh In On Lowe's, Micron And More, 'Fast Money Halftime Report' Picks For October 9. It takes analysis and work, and then proper position sizing and management. But, you should also realize that this is still a probability-based analysis. If you are interested in unusual options activity because of exponential gains from front-running potential news, thats normal. . This is not a waste of time. Jon Najarian Leaves CNBC to Chart New Rebellious Horizons. She is a popular actress, and was featured in the show Wall Street . Pete Najarian has also bought these calls and he is going to hold them through the expiration. I absolutely loved this book. Najarian explained that this is a bearish bet because SQQQ is the short ETF and he thinks the trade might be a protection. All rights reserved. Pete Najarian spoke about high options activity in Taiwan Semiconductor Mfg. Instead, its a way of trying to tilt the odds in our favor; a way of setting up a portfolio of trades with a goal of a positive return. Starting in November 2020, we noticed that Gluu Mobile Inc. (GLUU) was starting to heat up. This insiders guide will show you how you can identify, screen, and trade unusual options activity just like Jon Najarian,Pete Najarian, and our team of analysts at Market Rebellion. There are a number of ways that a trade can be unusual: option trading volume, open interest, the date of expiration, the strike price, and the price paid. Jon Najarian has also noticed a purchase of the November $22 calls in Builders FirstSource, Inc. (NASDAQ: BLDR). See Terms of Use for details. authenticate users, apply security measures, and prevent spam and abuse, and, display personalised ads and content based on interest profiles, measure the effectiveness of personalised ads and content, and, develop and improve our products and services. 2023 Market Rebellion, LLC. Benzinga does not provide investment advice. Instead, it is a way of trying to tilt the odds in our favor; a way of setting up a portfolio of trades with a goal of a positive return. And that is information that we act on. He also noticed that traders are buying the November 35.50 calls in Pfizer Inc. PFE. In effect, it is a gauge of interest in the contract at any point in time. For example, we like to see high options volume relative to open interest. On June 23rd, 2022, a trader picked up 2,300 far out-of-the-money $70-strike call options in Zendesk (ZEN) expiring in less than a month. Reviewed in the United States on October 19, 2020. , , , , , , . . The Smart Money Saw it First. Can is the operative word. As individual traders, we focus on capitalizing while these big funds are still amassing their market-moving position. The ask represents the price at which someone is willing to openly sell the option. Unusual options activity is not a full-proof method for trading stocks. Instead, understand the process by which trade ideas are chosen from the potential unusual options activity. Please try again. One example, we frequently buy higher delta calls or puts than the triggering trade (or may even put them on as a vertical spread instead of an outright call/put purchase). Because of the inherent leverage that it offers, the ripples of Smart Money behavior are more easily seen by looking at options order flow than looking at trading in the stock market. To trade unusual options activity, you have to get to the heart of what exactly makes a trade unusual. Everyone is looking for an edge in the market. Every time he tells me about Pete and John's unusual call option activity it ALWAYS ranks. It just means that they passed the first level test. Built for fast-paced traders. Many popular ones typically look at the ratio of volume to open interest in a particular option. The trade breaks even at $19.15 or 9.12% above the current stock price. This doesnt mean that all of these trades are actionable. It has weathered the test of time and continues to perform as a reliable indication of where the Smart Money is investing. Investors are fully responsible for any investment decisions they make. Check out trade ideas from our UOA lineup: Exploring Unusual Options Activity Trade Ideas. And thats an exchange we are happy to make. This doesnt mean that all of these trades are actionable. This is not a waste of time. Traders were buying the November $49 calls in the name. Market Rebellions reference to specific securities or Digital Assets should not be construed as a recommendation to buy, sell or hold that security or Digital Asset. Price paid: The price paid is how much the option buyer paid for the option. And to do that, they have to try to mask their activity. Follow the Smart Money is a page turner and will open your eyes towards better strategic trading. Someone is making a big bet (1,000,000 share equivalent) in the direction of the price. Sie knnen Ihre Einstellungen jederzeit ndern, indem Sie auf unseren Websites und Apps auf den Link Datenschutz-Dashboard klicken. FOLLOW YOUR MONEY INTO JOHN AND PETES' POCKETS!- A TRUE TITLE! On February 8, it was announced that Electronic Arts was buying GLUU for $12.50 a share, a nice premium over the $10 calls that were initially purchased. For example, we like to see high volume relative to open interest. Jon Najarian has reached a mutual agreement with CNBC to discontinue his exclusive contributor contract here's where you can watch him now. It doesnt mean that the stock price will move. If you are someone who doesnt learn easily , doesnt commit, or are lazy, dont kid yourself, dont buy. When Wall Street moves into (or out of) a stock, the smaller options market is often the first place its noticeable. A company may release great news and have the stock price barely budge or even go down. Yes, that means we pay more than if we bought out-of-the-money options, but it also means that we lower the amount of potential profitability. It starts out with a bit of a sales pitch (expected) but then turns to a good education of what is known as the Greeks. Learn how you can follow the Smart Money with a fresh UOA trade idea each week including technical levels so that you know where to enter and exit! Please try again. Everyone is looking for an edge in the market. Follow The Smart Money is an excellent book for those who are interested in learning about options, the stock market, and unusual options activity. Market Rebellion is not giving investment advice, tax advice, legal advice, or other professional advice. Yes, that means that we pay more than if we bought out-of-the-money options, but it also means that we lower the amount of potential profitability. Around 2,500 contracts of the April $18 calls were traded in Nuance Communications Inc. NUAN for $1.15. Insiders offer one easy explanation for the source of unusual options activity. How We Trade Options Building Wealth, Creating Income and Reducing Risk, 1996-2023, Amazon.com, Inc. or its affiliates, Reviewed in the United States on March 12, 2021. It has weathered the test of time and continues to perform as a reliable indication of where the Smart Money is investing. Ready to trade? . If you are interested in unusual options activity because of exponential gains from front-running potential news, thats normal. You recognize that you are not required to provide this consent as a condition of purchase and that you can withdraw consent at any time. He'll do the same exact position that is highlighted as unusual option activity. Jon and Pete Najarian have traded UOA for more than 30 yearsfrom when they were on the floor of the Chicago Board Options Exchange (CBOE) to today. I absolutely loved this book. This article was last updated on 12/14/2022. Unusual options activity is how we Follow the Smart Money in our trades. Open interest: Open interest is the amount of contracts outstanding in the market. Lets say that we see 10,000 calls are purchased versus open interest of 250 contracts. All investments involve risk, and the past performance of a security, Digital Asset, industry, sector, market, financial product, trading strategy, or individuals trading does not guarantee future results or returns. : If there is about to be a phase 3 drug trial announcement, it wouldnt be unusual to see implied volatility very high. See Also: Target Option Traders Turn Bearish Following Big Holiday Shopping Weekend. Market Rebellion is not giving investment advice, tax advice, legal advice, or other professional advice. He loves the trade and he decided to follow it. Pete Najarian has also bought these. Jon Najarian, Pete's brother, was a trader who got Pete into trading. Youll learn nothing from me. Everything youve ever wanted to know about Unusual Options Activityin one convenient insiders guide. Najarian Brothers See Unusual Options Activity In Bristol-Myers, AMD And More . One of the best investment books out there, Reviewed in the United States on January 15, 2020. We are sorry. Follow the Smart Money is a page turner and will open your eyes towards better strategic trading. Find out how they put the odds of success more in their favor by: How Rebels Trade Unusual Options Activity. That announcement caused shares of Activision to soar by 26%. On CNBC's "Fast Money Halftime Report," Jon Najarian said that someone bought a lot of calls in Abercrombie & Fitch Co. (NYSE: ANF) on Wednesday. Its really in how these multiple factors come together that qualifies an options trade as truly unusual. At Market Rebellion, our unusual options activity trades are all centered around the idea of controlling risk, with a firm understanding of the fundamentals and mechanics of options trading. Whether that something is an upcoming acquisition or news on a successful (or unsuccessful) drug trial, it doesnt matter. It might. : One of the best investment books out there, Reviewed in the United States on January 15, 2020. GLUU is a stock that often flies under the radar of most traders so when we saw these colossal back-to-back option trades, we flagged it immediately for its highly bullish sentiment. Meaning those cheap calls that were previously trading far out-of-the-money had appreciated by hundreds of dollars in a matter of days.
