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Key Takeaways
- Unusual options activity focuses the tape on contracts that stand out from their normal trading pattern.
- Compare volume, premium, execution pace, and concentration by strike and expiration.
- Use volume relative to its own history and size relative to open interest to measure the activity.
- InsiderFinance’s Unusual filter selects contracts at least 10% out of the money with 35 days or less to expiration.
- Connect the execution pattern with the chart, catalyst, and position payoff.
What is unusual options activity?
Unusual options activity is options trading that stands out from a contract’s normal pattern, measured by volume against its own history, size against open interest, premium, execution pace, or concentration at one strike and expiration. Screens use it to bring a short list of contracts to the front of a busy tape for closer review.
How do you measure unusual options activity?
Volume ratio compares session volume with average daily volume for the same series. If a contract averages 80 contracts per day and trades 2,000, the ratio is 25.
Size-to-open-interest ratio compares a grouped execution with the outstanding position base. A 2,000-contract execution against 300 prior open interest produces 6.67.
Premium measures transaction dollars. At a $1.90 weighted execution price and a 100 premium multiplier, 2,000 contracts represent $380,000.
Execution pace and concentration show where the activity gathers. Group related fills, inspect their prices, and compare nearby strikes and expirations.
Hold the lookback and contract definition fixed. One earlier volume spike lifts the average and shrinks the current relative volume ratio. Compare the distribution of past activity as well as the average to understand the baseline.
Formula
Volume ratio = session contract volume / average daily contract volume. Size-to-OI ratio = grouped trade size / prior reported open interest.- Use a consistent lookback, such as 30 trading days, for average daily volume.
- Compare the same contract series: underlying, call or put, strike, and expiration.
- Use subsequent open-interest changes to measure net growth in outstanding positions.
- These ratios compare quantities; a time-adjusted pace calculation also uses elapsed time.
Worked Example
One call series averages 80 contracts per day over 30 trading days. A grouped execution contains 2,000 contracts at a $1.90 weighted price, with a 100 premium multiplier and prior open interest of 300.
- Volume relative to average daily volume: 2,000 / 80 = 25×
- Size relative to prior open interest: 2,000 / 300 = 6.67×
- Premium: $1.90 × 2,000 × 100 = $380,000
The execution combines $380,000 in premium with 25 times average daily volume and 6.67 times prior open interest. Inspect execution side and related contracts, then connect the activity with the chart and the proposed payoff.
How does InsiderFinance’s Unusual filter work?
InsiderFinance’s Unusual filter selects contracts at least 10% out of the money with 35 days or less to expiration: the short-dated contracts positioned for a substantial move. Read the fill and size for the current execution, then track net growth in the series with the next open-interest report.
Use premium, size, and execution type to narrow that view further. Golden Sweeps supply another focused screen: sweep execution, at least $1 million in premium, and size at least equal to reported open interest.
How do you build a trade from unusual options activity?
Find the concentration. Compare volume, premium, and size against the contract’s baseline and outstanding positions.
Read the execution. Locate fills against the bid and ask. Group related contracts to identify an outright option, spread, roll, or hedge.
Map the setup. Bring the activity onto the chart. Identify the trend, catalyst, and next decision level.
Choose the position. Compare strike, expiration, implied volatility, entry price, and breakeven. Model the option or spread across price scenarios, then set position size and the exit plan.
Track the development. Watch additional flow, the underlying’s response at the chosen levels, and subsequent open-interest changes. These observations connect the initial discovery with position management.
Start with the options-flow guide for the complete workflow, then use sweeps, open interest, and implied volatility to sharpen each part of the read.
Common unusual options activity mistakes
- Comparing against a moving baseline. Fix the lookback and the contract definition before you compare; one earlier volume spike lifts the average and shrinks today’s ratio.
- Reading call buying as the whole story. Call buying adds call exposure whether it opens long calls or closes short calls. Inspect related stock or option legs and compare execution sides, sizes, and trade conditions to identify the complete exposure.
- Skipping next-day open interest. The 6.67 times ratio compares today’s 2,000 contracts with the 300 open before the session. Compare the next report with the full session’s trades to measure whether outstanding contracts grew.
- Stopping at the filter. The Unusual filter keeps contracts at least 10% out of the money with 35 days or less to expiration. Find near-the-money and longer-dated size with the volume and size ratios, and let the chart, the catalyst, and the payoff decide the trade.
Bottom line
The contracts breaking hardest from their own history belong on your short list. Compare premium and size with that baseline, read the side and the related legs, then connect the print to the catalyst and the chart. Model the position, set the risk budget, and track next-day open interest against the plan.
Clear answers
Frequently Asked Questions
Sources and Further Reading
- OIC: Open Interest - Why It Matters
- Cboe: U.S. Options Daily Market Statistics
- Cboe Options Lite: trade and quote data
How entries are sourced, calculated and updated: editorial methodology.