![]() ![]() The activity is suggestive of these strategies, but an observer cannot be sure if a bettor is playing the contract outright or if the options bettor is hedging a large underlying position in common stock. These observations are made without knowing the investor's true intent by purchasing these options contracts. Options are "bearish" when a call is sold at/near bid price or a put is bought at/near ask price. Options are "bullish" when a call is purchased at/near ask price or a put is sold at/near bid price. These trades are made with the expectation that the value of the underlying asset is going to change dramatically in the future, and buyers and sellers will benefit from a greater profit margin. "Out of the money" contracts occur when the underlying price is under the strike price on a call option, or above the strike price on a put option. Time value is important in this context because it represents the difference between the strike price and the value of the underlying asset.Ĭontracts that are "out of the money" are also indicative of unusual options activity. Generally, additional time until a contract expires increases the potential for it to reach its strike price and grow its time value. The trading of a contract with an expiration date in the distant future is another sign of unusual activity. These contracts are not yet closed because a buyer has not purchased the contract, or a seller has not sold it. The number of unsettled contracts that have been traded, but not yet closed, is called open interest. ![]() The volume of options activity refers to the number of contracts traded over a given time period. After the option alert, the stock price moved down to $8.68.Įxceptionally large volume (compared to historical averages) is one reason for which options market activity can be considered unusual. On Friday, shares of AMC Entertainment (NYSE: AMC) saw unusual options activity. ![]()
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