Best Option Flow Scanners 2024

What is an Unusual Options Activity

Unusual options activity occurs when there is an abnormal increase in options trading volume compared to an option’s average trading volume. This could be due to many reasons, such as large institutional investors buying or selling options, or rumors about a potential merger. Whatever the reason, unusual options activity can provide clues about what big investors are doing and where a stock’s price might be headed.

There are a few things to keep in mind when looking at unusual options activity. First, it's important to look at the overall trend in the option’s trading volume. If the stock has been seeing increasing options volume over time, it's likely that the current level of activity is part of a longer-term trend.

Second, it's also important to consider the type of options that are seeing unusual activity - whether they are call or put options. Finally, it's also worth considering the strike prices of the options that are seeing unusually high activity. If all of the activity is concentrated in one or two strike prices, it could be an indication that traders are anticipating the stock’s price moving to those specific price levels.

Unusual Options Activity Example

An example of unusual options activity is an increase in put buying. This means more people are buying contracts that give them the right to sell a financial security at a certain price, rather than a call option to buy the security at a certain price. This could be a sign that people are expecting the asset to fall in price, and are trying to protect their investments.

Another example is when there is high volume trading in options that are out of the money. This means that people are betting on a price movement that they don’t feel strongly confident about - thus, they are looking to limit their risk by only buying the cheaper out-of-the-money options. Finally, when there is unusually high activity in options that only have a very short amount of time left before they expire, that could be a sign that people are trying to take advantage of a short-term event, such as earning announcements or regulatory changes.

Does Trading Based on Unusual Options Activity Work?

Do trades based on unusual options trading activity work? They certainly have the potential to give traders an edge, but it's important to understand that no options trading strategy is a sure thing. There are pros and cons to using such signals.

On the plus side, they can provide useful information about potential moves in the market. They can provide indications of insider trading or other market-moving news. By monitoring this activity, investors can get a head start on making profitable trades. Additionally, there are a number of online resources that provide real-time data on options activity, making it easy to track.

However, there are also some drawbacks to consider. First, unusual options activity doesn't always mean that there will be any significant movement in the underlying stock’s price. In some cases, it could simply be a sign of increased market volatility. Second, it can be difficult to interpret the signals correctly without a firm understanding of how the options market works.

Finally, because this information is readily available online, it's likely that other investors are also using it to make decisions. As a result, it's important to use other indicators in conjunction with unusual options activity to get the most accurate picture possible.

How Do Options Flow Scanners Work?

An options flow scanner works by looking for options order imbalances. It achieves this goal by analyzing data from the options market makers. The goal is to identify trades that can take advantage of such temporary market imbalances and make a profit.

There are two main types of options flow scanners: intraday and real-time. Intraday options flow scanners use historical data to make predictions about future price movement. On the other hand, real-time options flow scanners use live price action data to generate signals.

An options flow scanner can be used to trade any type of options contract: call options, put options, etc. And they can be used on any timeframe: 1 minute, 5 minutes, hourly, daily, etc.

To use an options flow scanner, you first need to find a good one. There are many different options flow scanners available online. Some are free, while others cost money. Once you've found a good scanner, you need to thoroughly understand how it works. Most scanners come with a user manual or tutorial that you can follow.

Once you've found a good scanner and understand how it works, you need to find a good broker that offers options trading. Not all brokers offer options trading. Additionally, not all brokers that offer options trading allow you to use third-party scanners. So, make sure your broker meets both of these criteria before moving forward.

Finally, once you've found a good scanner and broker, you need to set up your account and platform so that you can start trading. This usually just requires a few clicks of a mouse. Once everything is set up, you're ready to start scanning for options order imbalances and making profits.

How to Use an Options Activity Scanner

Here's how to use an unusual options activity scanner:

How to Use Options Activity Scanner

1. First, select the underlying security that you're interested in. This can be done by entering the ticker symbol or selecting from a list of assets.

2. Second, set the timeframe for the scan. This can be done by selecting a specific date range or by choosing to scan intraday activity.

3. Next, set the parameters for the scan. This will include things such as the expiration date and the strike price range.

How to Use Options Activity Scanner

4. Run the scan and review the results. The options activity scanner will return a list of options contracts that match your criteria.

5. Finally, choose the contract that you want to trade and enter your order.

By following these steps, you can use an unusual options activity scanner to quickly find high-volume contracts and take advantage of trading opportunities.