How to Find Unusual Options Activity

March 11, 2021

Without a market edge, you’re just gambling.

Now, I’ve discussed why unusual options activity can be a great market edge for the little guy in today’s competitive market.

But, understanding what to look for when trading on unusual option activity is crucial; it’s also part of the problem.

Trying to access the right data it is the other.

I want to talk about the other side of this coin: how to find unusual option activity to begin with.

Unfortunately, there’s no easy way to see all the millions of options contracts that trade hands each day.

A simple options quote from your broker or a free site may show you volume. It may even show you open interest and average daily volume.

But you can’t really scour the entire market one contract at a time to find an opportunity.

Real-Time Options Data from Exchanges

Making money isn’t easy. And as they say, it takes money to make money.

Before electronic trading, the only way to follow unusual option activity in real-time was to have a seat on the floor of the CBOE.

Those seats were limited on the CBOE and had sold upwards to $2 million dollars in their heyday.  

Thankfully for the advancements in technology leveled the playing field, but there is still a cost.

Exchanges charge high prices to access their market data because they are working with big firms, banks or institutions.

The real-time quote data you receive on your platform may seem free, but the cost is offset by commissions or payment for order flow.

For specific market data, you have to pay for it.

After leaving the professional side of the business, I personally pay for real-time data from all 15 options exchanges because I trade it myself, but it’s how I also help our subscribers.

It’s a business expense, but it’s costly.

We pay upwards to a $1,000 a month for real-time and historical market data.

In fact, let me share this quick story with you.

I’m often asked, "can you teach me how to find and trade unusual options activity?"

After all, knowing how to specifically scan millions of trades each day isn’t easy. And as I said, it also isn’t cheap.

But several years ago, I wrote a detailed manual on how to find this type of activity and to access the data.

I recommended two institutional type of products from the CBOE.

Unfortunately, 99.9% of those who purchased the manual and received access to the data decided it was either too much work or too costly in less than a month.

It was, after all, a lot of data all at once and it can be similar with trying to drink water out a fire hydrant.

It's become second nature for me because I've been watching the tape for more than 15 years.

It's that skill that's allowed me to spot the big trades ahead of news, publish it and to be quoted in all the major financial publications.

Just like you can’t become a black belt overnight, you can’t become an expert trader either. It takes time, money and commitment.

Free Sites or Trading Platforms for Unusual Options Activity

There are a few places with some data and screening tools.

 If you happen to use Charles Schwab - TD Ameritrade, you can use its ThinkorSwim platform to find some of this.

ThinkorSwim has something called the Sizzle Index, but it’s only using the average daily volume for the last 5 days.

I find that way too noisy and it only tells you overall volume traded, which means you have to go through each symbol to try to find if something sticks out in a certain strike.

Barchart is another that offers some free tools to get started.

But, neither of those places has all the relevant options data in real time and is also easy to search and scan for the 4 triggers that make the perfect unusual option activity alert.

Either it is delayed information (15 minutes to even end-of-day), or it is not useful.

Even if these free platforms and websites were more real-time and complete, there’s no single indicator or chart that would point out a good trade.

For true access to unusual options activity that is both relevant and useful, a serious trader needs more.

Unusual Options Activity Trading Services

The first turns off most people because of the sheer volume of information and cost to access it. The second doesn’t provide enough information or a way to actually act on it.

Which only leaves just one place: trading services.

Now, if I were you, I’d be very skeptical of most services and publishers on the internet.

I’ve been self-publishing my information online since 2008 (F/K/A OptionSIZZLE) so I can make this accessible to those who don’t have the time, experience or resources to do it themselves. 

Despite the publishers that have come and gone, I’ve been able to maintain a great reputation.

I’d love to teach more people the art that I learned because if I get hit by a bus, it’s all gone.

Leaving a legacy is important and helping those take back control of their portfolios is my mission.

But as noted, just handing someone the tools and bills for expensive, real-time streams of trading data doesn’t go over well.

I’m bragging because I’ve been doing this for over 15 years as a professional and now a little guy.

My resume, experience and competitiveness do speak for itself.

I can’t exactly explain all of that quickly or easily to someone looking to use this strategy.

Just as I started, you show up each day on the floor and learn by watching the best.

That’s why I created Hot Money Trader in the first place.

I pay the high cost for the real-time data; use my proprietary algorithm for the best opportunities.

There, I do all of the work and provide you actionable trades.

And you're able to learn by following and create confidence while navigating through ebb and flow of the market.

Hot Money Trader is the place where I bring all of that together.

If that sounds good to you, click here for more on Hot Money Trader.

Here's to living rich,

Joshua M. Belanger

Joshua M. Belanger
Joshua Belanger is founder of CounterVest and the editor of Hot Money Trader. He has been providing ordinary investors blockbuster returns since 2008. In 2018, the average return of Hot Money Trader beat the markets by over 15%

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