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Unusual Options Activity

Unusual options activity alerts are alerts that appear across a professional scanner app. When a Wall Street firm makes a recommendation or sets a new price target, this can have an effect on the options market and market makers have to widen their spreads. For instance, you might see an option quote at 0.50 x .0.60, and that can immediately change to 0.40 x 0.70 whenever there is activity.

Before making any options trade, it’s a good idea to learn about the terminology.

Calls at the Ask: Bullish indication

Calls at the Bid: Bearish indication

Market Sweep: Sweepers that move quickly are tactical. They stay incognito, splitting orders across multiple exchanges concealing their true order and size.

It's important to remember the market sentiment and how that relates to the underlying asset. Another important clue is the current contract size traded versus the total daily volume. In addition, the trade count could show a potential change in the short-term direction.

Profitable traders focus on various strategies. They also focus on statistics. Terms like delta, premium, strike price, and extrinsic value. These are concepts options traders are most concerned about.

In addition, it is important to understand how in or out-of-the-money options affect price action.

Frank S.

Insider Buying Activity

Insider buying Activity

Insider buying is the purchase of shares in a corporation by a director, officer, or executive within the company. This is completely different from insider trading which is illegal.

How Insider Buying Works:

Insider buying or selling can have an immediate effect on the share price. If there has been a record of positive fundamental changes within the company, positive analyst ratings, and news activity, the result are a higher perceived valuation.
It is also important to remember the level of institutional ownership as hedge funds could drive prices even higher based on the activity. In addition, remember the consensus estimates. If there is positive news followed by insider buying, an opportunity may be on the horizon.

Frank S.

Earnings Estimate and Impact on Stocks

Earnings estimates are prepared by analysts who are working for investment firms. They often research past figures of sales growth along with industry trends.

A consensus estimate is calculated by taking the estimates from all the analysts who are currently following the stock. For Instance, let's take a hypothetical estimate for APPL stock. It could be reported by Reuters with an "Outperform" rating and include a price target. Barclays may also include a research report with their own price targets.

When the iPhone maker reports quarterly earrings, traders need to pay attention to the difference between the actual earnings versus the consensus. When the firm reports earnings that surpass expectations, it is called an earnings surprise.

Traders can follow an earnings calendar in addition to any news from the conference call. Earnings transcripts usually can be found on the company website. You may need to subscribe to a professional news service for any transcript resources.

Frank S.