October 16, 2008
Stock option trading?
amaverick1202 asked:
How is it possible to determine if puts/calls are being bought or actually being sold in the daily action.
How is it possible to determine if puts/calls are being bought or actually being sold in the daily action.
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Comments on Stock option trading? »
Go to Yahoo-finance, check the stock and click on options. It should show the daily volume.
Go to MSN Money or Yahoo Finance they provide the daily volume in option transactions, both for puts and calls
First Answer:
For every trade there is both a buyer and a seller so the number of contracts bought is always equal to the number of options sold.
Second Answer:
If you want to know if a trade was the result of a buy order or a sell order you can tell some of the time. If the trade takes place at the bid quote, or much closer to the bid quote than the ask quote, it was likely a sell order filled by a market maker. If the trade takes place at the ask quote, or much closer to the ask quote than the bid quote, it was likely a buy order filled by a market maker. I believe there is at least one individual, Jon Najarian (aka “Dr. J”), who scans the quote information regularly to determine if the orders were buys or sells.
Third Answer:
Even if you could accurately answer the question, it would not tell you anything of any value. If I sell 10 put contracts it is just as likely that I am bearish as bullish. If I were bearish I would have shorted 1,000 shares of the stock, but you would have no way of knowing that.
Additional Comment:
I see one of the other answers suggesting using the Yahoo quote service to check the volume on options. I suggest you you use some other quote service if you want to check the voluem. I have see the wrong volume reported by Yahoo many time.
Yahoo finance is good free site that will they option volume.
Beware that this info can not tell you if people are bullish or bearish.
For example if there is a lot of put volume it could mean that someone is bearish and brought puts or someone who is long the stock but wants to protect against any downside movement. Also people should be selling puts thinking the stock will continue to increase.
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