Positioning & Flow
Block Trade
Also called: block
A block trade is a single large option transaction, typically thousands of contracts, executed on one exchange and often negotiated off the public order book before being printed. Blocks are usually institutional.
Blocks differ from sweeps in execution style: one venue and one price rather than many venues and many prices. Because the size was arranged privately, the print may not reflect urgency, and it frequently forms one leg of a larger structure such as a collar against a stock position or a spread.
Block flow is most useful when paired with the next day's open interest change and with knowledge of the participant type. A 10,000-lot put block in an index product is often a fund hedging; the same size in a small-cap is far more unusual.
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Frequently asked questions
Are block trades bullish or bearish?
Often neither on their own. Check the side of the spread, look for offsetting legs printed in the same second, and confirm whether the position opened or closed via the next day's open interest.