What is Options Flow?
Options flow refers to the buying and selling activity in the options market. Large traders often use options to make big directional bets.
Why Options Flow Matters
- Leverage - Options amplify returns, so big money uses them
- Leading indicator - Options activity often precedes stock moves
- Sentiment - Shows what smart money expects
Key Concepts
Calls vs Puts
- Call buying = Bullish bet
- Put buying = Bearish bet
Sweeps vs Blocks
- Sweep = Aggressive, fills across exchanges (urgency)
- Block = Single large order (negotiated)
Opening vs Closing
- Opening = New position (conviction)
- Closing = Exiting position
How to Interpret
| Signal | Meaning |
|---|---|
| Large call sweep at ask | Aggressive bullish bet |
| Large put sweep at ask | Aggressive bearish bet |
| Unusual volume | Something brewing |
| Premium paid above average | High conviction |
Limitations
- Not all flow is directional (hedging exists)
- Retail has grown (YOLO trades can mislead)
- Always combine with other signals