Unusual options activity highlights options trades that stand out from normal volume or size. Traders watch it for clues. It is not a signal by itself. Use it with context, implied volatility, and risk rules.
What is unusual options activity?
- Options volume far above the stock’s average.
- Large single prints or sweeps that hit the ask.
- Volume greater than existing open interest (VOI > OI).
- Sharp changes in implied volatility (IV).
- Concentration in a strike, expiry, or side (calls vs puts).
- Repeated prints across exchanges within seconds.
Key fields to note:
- Contract: ticker, strike, expiry, call/put.
- Side: at bid, mid, ask, or above ask.
- Size: contracts and premium paid.
- Open interest: before trade; updates next day (T+1).
- IV and greeks: delta, theta, vega.
- Time and venue: regular vs after-hours.
Why it matters for options traders
- Surfaces potential catalysts or positioning.
- Reveals urgency when orders sweep the book.
- Helps gauge sentiment beyond stock volume.
- Informs strategy selection and hedging.
- But: it can be hedging, not a directional bet.
- Never a guarantee of future moves.
Step-by-step with concrete numbers
Example setup:
- Stock XYZ at $50. Average daily call volume: 5,000.
- Today: 50,000 calls trade. Relative volume = 10x.
- Notable print: 10,000 Sep 55 Calls at $1.20, at ask, swept.
- Premium outlay: 10,000 × 100 × $1.20 = $1,200,000.
- Open interest before: 2,000. Volume > OI suggests opening.
- IV jumps from 25% to 35%. Put/Call drops from 0.9 to 0.4.
How to analyze it:
- Direction: at/above ask implies buyers were aggressive.
- Time: concentrated within 2 minutes suggests urgency.
- Delta: say 0.35. Notional exposure ≈ 10,000 × 100 × $50 × 0.35 = $17.5M delta-adjusted.
- Breakeven at expiry: $55 + $1.20 = $56.20.
- Hypothetical P/L at $60 expiry: option value ≈ $5.00. Profit ≈ $3.80 per contract (before fees).
- Max loss: premium paid. Goes to $0 if expires OTM.
Risk-based sizing (example):
- Account: $50,000. Risk per trade: 1% = $500.
- Contracts = floor($500 ÷ ($1.20 × 100)) = 4 contracts.
Follow-up checklist:
- Next day: did OI increase near 10,000? Confirms opening.
- News/catalysts: earnings date, guidance, FDA, M&A chatter.
- IV context: IV rank/percentile vs 1y range.
- Liquidity: spreads tight enough to exit?
- Exit plan: targets, time stop, or IV crush protection.
Common mistakes & risk
- Chasing every big print without a plan.
- Ignoring that UOA can be hedging.
- Confusing volume spikes with durable trends.
- Overlooking IV crush around events.
- Using market orders in wide spreads.
- Oversizing. Max loss equals premium on long options.
- Reading OI same day. It updates T+1.
Risk tips:
- Cap per-trade risk (e.g., 0.5–2% of equity).
- Prefer liquid chains (tight spreads, deep OI).
- Align strategy with IV. High IV: consider spreads. Low IV: consider debits.
- Set exits before entry.
Analyze with ImpliedOptions
- Scan live flow: impliedoptions.com/flow
- Build trades from flow:
- Strategy Builder: /strategy-builder
- Profit Calculator: /analysis
Workflow:
- Find a standout sweep on Flow.
- Send to Strategy Builder to compare alternatives:
- Long call vs debit spread vs calendar.
- See greeks and IV impact.
- Use Profit Calculator:
- Model P/L at price/IV/time scenarios.
- Check breakeven and max loss.
- Save rules. Backtest ideas where data is available. No promises of performance.
FAQ
Is unusual options activity always directional?
No. It can be hedging or arbitrage. Treat it as a clue, not a conclusion.
How do I tell if the trade was opening?
Compare volume vs open interest. Confirm the next day when OI updates (T+1).
What is a sweep?
A large order split across exchanges to fill fast. Often indicates urgency.
What filters should I use?
- Relative volume ≥ 3–10x.
- Minimum premium (e.g., $200k+).
- Expiry window (7–60 days).
- IV rank thresholds.
- Exclude illiquid spreads.
How do IV and greeks help?
- IV shows event risk and pricing.
- Delta gauges directional exposure.
- Theta shows time decay.
- Vega shows IV sensitivity.