Josh Enomoto
5 min read
In This Article:
While the options market carries a reputation for unique complexities, it can also be a powerful tool for speculation. Thanks to their leverage, traders can utilize debit spreads to bet on relatively small movements in the open market. These valuation swings, however, can translate to massive payouts in the derivatives arena, thus attracting an increasing number of retail participants.
Still, even if an investor had absolutely no desire to trade options, it’s always worthwhile to consider Barchart’s screener for unusual stock options volume. First, unlike many other financial publications, Barchart provides a comprehensive list of securities attracting attention from the big dogs. Second, on a more fundamental note, aberrant transactions can tip retail investors off to potential moves that could occur in the future.
-
Exxon Stock is Still Cheap Here - Shorting OTM Puts Sets a Lower Buy-In
-
Triple Your Kimberly-Clark Dividend with this Options Strategy
To be clear, it’s not a foolproof mechanism. However, some reasonable inferences can be made. For instance, if traders buy large volumes of out-of-money call options, one can assume that these market participants are bullish. After all, for a debit-based transaction to be profitable, the underlying event that is being speculated on must materialize; otherwise, the trade falls apart.
On Friday, one of the top highlights in Barchart’s unusual options screener was video-sharing and live-streaming platform Bilibili (BILI). Commonly known as the YouTube of China, Bilibili has enjoyed double-digit growth in the first quarter of this year. Further, its advertising revenue is up 20% on a year-over-year basis, reflecting the platform’s accelerating popularity.
Heading into the weekend, BILI stock represented one of the highlights in terms of unusual derivatives activity. Total volume reached 53,310 contracts, representing a 202.57% lift over the trailing one-month average. But at first glance, circumstances didn’t appear encouraging, with call volume only landing at 16,043 contracts, while put volume jumped to 37,267.
Fortunately, options flow — which exclusively filters for big block transactions likely placed by institutional investors — clarified the context. On the final business day of last week, net trade sentiment slipped to $662,100 above parity, thus favoring the bulls. As it turned out, the large number of puts represented sold or credit-based contracts.
