OptionVue’s latest product brings powerful tools to researching, analyzing, and timing large block trades — all in real-time!

Building The Perfect Options Trading System

When it comes to creating a trading system if you talked to 100 people, they may describe to you 100 different systems, and they all may be successful. One such system people use is looking at option block trades to see if they can glean any insights from the large trades being executed. OptionVue is excited to announce our latest upgrade called BlockTrades that lets you search for just these types of trades.

The BlockTrades Interface

Powerful Search Tools for Block Trades

As with all trading systems the more you watch it the more you get from it. There are a few things you want to be able to search for when looking at option block trades. Most people immediately find that they need to put a minimum size on the number of contracts traded, 1 contract traded usually does not tell you much. Just like trading stocks you want to filter out as much “noise” in the market as you can. In keeping with this idea, along with filtering the number of contracts, many people may also filter the following:

  • Look at stocks in a specific sector or industry only.
  • Create a custom stock list that they always trade from.
  • Create a new list every day with a new group of stocks.
  • Do you want to look at options with just 1 day until expiration or 1 year?
  • Do you want options that are very far out of the money or very far in the money?
  • Do you want stocks that are reporting earnings soon or not for a while?
  • Do you want stocks that may be making an announcement soon?
  • Do you want to look for large trades that seem to be made for no particular reason (implying somebody may think a company is about to make an unexpected surprise announcement)?

Research Your Option Trade — Then Act and Monitor!

After you have your criteria, you are ready to get started, set it up and watch the trades come in, but wait, what do all these trades mean? Now you must ask yourself a new set of questions:

  • Is this trade a hedge for a current position?
  • Is it the start of someone accumulating a position?
  • Is this a speculative trade?
  • Is this trade one part of a larger trade?
  • Is this trade a very large trade broken up into smaller trades to “hide” what they are doing?
  • Is this trade related to other trades from today, yesterday, last week, etc.?
  • Are they exiting or entering a position?

When Executing Block Trades Ask Yourself Two Questions

What we’re trying to get at is it really boils down to 2 main questions:

  1. What am I looking for and what criteria will help me find it?
  2. What are they (the traders) really doing (what are the trades really telling me), what is the traders ultimate (actual) position?

If you are willing to put in the time and effort to really learn, the rewards can be larger than you dreamed.