What is options flow?
Our unusual options flow tool shows stock symbols that have unusually high volume and activity for the day. Options flow is also often referred to as unusual options activity (UOA). We scan every trade on the market (hundreds per second!) whether it's made by a retail trader or a large institution. We consolidate these trades to find large orders, even if they were broken up into parts. These trades are then filtered to find the largest and most uncommon trades compared to recent activity, allowing you to easily see the most important trades as they are made in real-time by other traders. These are not theoretical ideas or "signals", these are actual, real trades that others are making.
Our summary page shows an overview of which symbols are experiencing the most unusual activity, while the live page will show you the real-time options flow (that is, the actual trades as they are being made). The stocks on the summary page are ordered by a proprietary score to show their sentiment and strength. Rather than simply showing the stocks with the most activity (which would always be SPY, QQQ, etc.), we look at both the number of unusual trades and also the size and sentiment of the trades. The stocks at the top of the list are the stocks that are showing the strongest amount of activity towards a certain sentiment (bearish or bullish).
The power of OptionStrat flow
Our flow platform goes beyond just showing large and unusual orders. Just as you can build over 50 strategies using our options profit calculator, we can detect such strategies in the flow to piece together complex strategies from each individual leg of the trade. In the flow feed you'll see plenty of simple calls and puts being traded, but you'll also find more complex mutli-leg strategies from spreads to iron-condors. On other platforms you could easily get the wrong picture by looking at individual trades that are actually interconnected. In addition to showing complex order flow, we show both buy-side and sell-side transactions by detecting the urgency and aggression of the order.
By clicking on any flow item, you can pull up stats about that particular order including how to replicate that order as well as the performance of the order. We track the performance of each order as soon as it is posted, so you can see the current return of the trade as well as the maximum profit and maximum loss that it has reached so far. To learn more about the specific features of our flow platform, please see our options flow tutorial.
Types of option flow trades
If you've ever made an options trade, you may have noticed that your order didn't execute in a single transaction. Instead, your order may have been matched with multiple other orders and executed in a few parts. This happens because chances are slim that somebody else wants to sell exactly the same amount of options as you are trying to buy. Instead, your purchase may be fulfilled by multiple sellers. This may only happen occasionally for smaller orders, however large traders attempting to move a large lot of options at once will certainly run into this. If they submit an order to buy 1,000 contracts, they may find 100 sellers willing to sell 10 contracts each. To the untrained eye, this could look like 100 smaller trades, just small fish in sea of millions of trades per day. Scanning for options flow involves uncovering this activity by consolidating smaller trades back into the larger order that actually triggered them. Through our analysis, we piece together this activity to discover that it's actually a larger trade, potentially made by an institutional trader (or as the trading community likes to call them, a whale). Such whales may even break up their order into parts like this on purpose or use other tactics to hide their activity.
The various order types that you will find on our site are:
- Single: An order that is usually rather small and was executed as a single trade.
- Sweep: An order that executed as multiple trades across multiple exchanges. This indicates that the order was split up and urgent. Each trade in the order is for the same contract (strike and expiration)
- Split: Similar to a sweep, but only on a single exchange. A large order that was executed as multiple smaller trades.
- Block: A privately negotiated, off-exchange order. These are often the most significant in size (in the millions of dollars) and are often a "block" of multiple option contracts that are traded at once (for example, a bundle of calls for different strikes and expirations)
Using options flow to trade
Now that you know what options flow is and what types of trades there are, lets get into some tips for how to use options flow in your daily trading. Everyone has their own styles of trading, whether is day trading or swing trading, or whether buying long calls and puts or doing something safer like a spread, or even just trading shares. You can use options flow to find new ideas as well as confirm existing ideas before taking them.
Find new ideas
Options flow can be used to find new trading opportunities by looking at the summary page and checking on the trending stocks for the day. The trades closer to the top will have the most amount of directional flow and make a good starting point. Try researching these stocks to determine why they are trending, as it is important to understand the full picture. For example, is there an event such as a product release or an earnings announcement coming soon? Subscribers to our full flow service will actually see news headlines like this when clicking on a particular flow item that has recent material news.
After you've moved on from the summary tab and are looking at the list of live flow, look out for repeated flow in one direction. Lots of repeated flow sends a clear signal that potentially multiple traders are all betting on the same direction.
Confirm existing ideas
Another method is to use flow to confirm or deny your own existing trade ideas, giving you the confidence to enter, wait, or exit an existing trade idea. For example, you may already have some favorite stocks that you day trade and are knowledgeable about, or you found a stock and it has a good setup already. You can then use options flow to make sure you are trading with the flow and not against it. If you see that options flow is leaning the other way, you could reconsider your trade or do some more research into why other traders are betting the opposite direction.
Check out our video on trading with options flow for more information and real examples of putting the above in practice.
Filtering trades
Our algorithm constantly adjusts itself to determine what thresholds to use for our automatic flow filtering, however we also allow you to customize your own filters to further filter down the flow into a more manageable amount.
On the right side of the page you can find all of the available filters, and if you become a subscriber you can also save these filters and set up alerts when matching trades are found. There are a few pre-made filters in the "My Filters" area that have already been set up for you, but here are some additional tips for building your own filters:
- Pay attention to expiration: Sometimes the expiration can be more important than size. After all, traders with all kinds of account sizes are making trades - a 100k trade could be small for a large institution but large for an insider who knows something. Trades with closer expiration dates are less likely to be hedges and more likely to be trades that have strong conviction behind them. (Of course, this is a factor in our own detection algorithm and is why you see lots more near term flow than long term)
- Use volume to gauge activity: The volume of an option updates in real-time and shows how many trades have been made for that option on the current day. Open interest however is only updated once per day and shows the number of outstanding contracts (contracts that have not been closed). If the volume is more than open interest, it indicates that there is a lot more activity than usual for the particular contract. Contracts with higher volume are also more liquid and easier to trade, a win win.
- Above ask or below bid shows urgency: When trading, we are always trying to get the best price for our trade - but it can be difficult when options have large spreads. If an option has a bid of $5 and an ask of $5.20, you may want to submit an order in the middle and see if you can get filled. However, if you are urgently trying to buy into a position, you may take the initial loss and go directly for the ask. (And if there aren't enough sellers at the ask, you would have to go above the ask). Buys that are above the ask and sells that are below the bid indicate urgency as the trader was not willing to wait for a better price or more sellers.
Additional types of flow
In addition to unusual option trades, OptionStrat flow now includes news flow, congress flow, and insider flow.
News Flow
You may have seen our live news headlines throughout the website. When designing a strategy or clicking a specific flow trade, we show breaking news headlines that indicate why a stock is moving. With news flow, you can see all of these headlines in one place, and filter them just like you can with options flow.
Congress Flow
We all know that money is unfortunately too involved in politics, but did you know that US congress members and their immediate family must publicly disclose their stock trades? Many of these politicians have beat the market over the years, and you can now follow along with them. Our congress flow takes the data from these forms and displays it in an easy-to-use interface. Note that congress trades are not reported in real-time, as the member has up to 45 days by law to report their transactions.
Insider Flow
Similar to congress members, the CEO and other executives of public companies are required by the SEC to report trades they make on their company stock. The goal is to prevent insider trading, as insiders should never use non-public information to profit (or avoid a loss) by trading their own stock. However, that is difficult to prove, and it's likely that these insiders know information that others don't. Our insider flow pulls data from these filings to compile all insider trades in one searchable database. Like our options flow alerts, you can also set alerts for news events, congress trades, and insider trades.
Subscription benefits
You can access most of our unusual options activity platform above for free. The data is delayed by 15 minutes and around 10% of the total flow is shown. By upgrading to a paid account, you will gain access to real-time data and all of our premium features:
- Saved filters: Any filter combination can be saved to your account so that you can easily toggle between any of your favorite filters. A saved filter can also have highlighting and alerts enabled. Highlighting will highlight any matching trades in the list so that they stand out more (you may already see some trades highlighted in orange, pink, or blue from our default filters).
- Alerts: Setting up alerts will allow you to receive notifications in your browser, or if you are a mobile app user, directly to your mobile device. You can set up an alert for any of your custom saved filters.
- Performance tracking: As mentioned previously, one benefit of OptionStrat flow over the competition is our performance tracking. Every flow item is tracked from the moment it's alerted until it expires, allowing you to see the performance of it over time through a historical chart. We also track and show the maximum profit and loss that each order reaches during its lifetime.
- Historical searching: Subscribers gain access to the historical tab which provides a list of all historical flow for the timeframe you choose. Just like the real-time flow, you can instantly filter it and track the performance to backtest your ideas.
- Futures data: Futures are some of the most widely traded securities in the world. Subscribers gain access to options flow data on futures, allowing you to see massive option bets on futures like /ES (S&P 500 Futures), /GC (Gold), /BTC (Bitcoin), /6E (Euro Forex), and more.
- Access to our other option tools: OptionStrat has two other extremely useful option tools that are included in our flow subscription. Our strategy builder and options optimizer tools can be found on the menu of this page. They both contain some locked features such as calculating the chance of profit and viewing market events and news. These features carry through to our flow sevice as well, so you get to see the chance of profit of flow trades and news that effects them.
Our subscription membership plans can be found on our upgrade page.
For more information on how to use our unusual options flow platform, please see the full tutorial.