Shares of NIO (NYSE: NIO) saw some unusual options activity on Wednesday. Following the unusual option alert, the stock price moved up to $19.53.
- Sentiment: BEARISH
- Option Type: TRADE
- Trade Type: CALL
- Expiration Date: 2020-09-18
- Strike Price: $19.00
- Volume: 9314
- Open Interest: 17218
3 Indications of Unusual Options Activity
Extraordinarily large volume is one indication of unusual options activity. Volume refers to the total shares contracts traded in a day when discussing options activity. Unsettled contracts that have been traded, but not yet closed, are called open interest. These contracts are not closed because a buyer has not purchased a contract, or a seller has not sold it.
A contract with an expiration date in the distant future is another tell of unusual activity. Generally, additional time until a contract expires increases the potential for it to reach its strike price and grow its time value. Time value is important in this context because it represents the difference between the strike price and the value of the underlying asset.
Contracts with a strike price far from the underlying price are also considered unusual because they are defined as being “out of the money”. This occurs when the underlying price is under the strike price on a call option, or above the strike price on a put option. These trades are made because the underlying asset value is expected to change dramatically in the future, and the buyer or seller can take advantage of a greater profit margin.
Understanding Sentiment
Options are “bullish” when a call is purchased at/near ask price or a put is sold at/near bid price. Options are “bearish” when a call is sold at/near bid price or a put is bought at/near ask price.
These observations are made without knowing the investor’s true intent by purchasing these options contracts. 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. For the latter case, bullish options activity may be less meaningful than the exposure a large investor has on their short position in common stock.
Using These Strategies to Trade Options
Unusual options activity is an advantageous strategy that may greatly reward an investor if they are highly skilled, but for the less experienced trader, it should remain as another tool to make an educated investment decision while taking other observations into account.
For more information to understand options alerts, visit https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts
See more from Benzinga
- Benzinga's Top Upgrades, Downgrades For August 26, 2020
- Unusual Options Activity Insight: Nio
- Benzinga's Top Upgrades, Downgrades For August 25, 2020
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
"activity" - Google News
August 26, 2020 at 08:55PM
https://ift.tt/2D1HepD
Analyzing NIO's Unusual Options Activity - Yahoo Finance
"activity" - Google News
https://ift.tt/3ddCXMh
https://ift.tt/2WkO13c
Bagikan Berita Ini
0 Response to "Analyzing NIO's Unusual Options Activity - Yahoo Finance"
Post a Comment