Five things to check on every order
- Premium: total dollars spent. $1M+ gets attention; size relative to the stock matters too.
- Volume vs open interest: volume above OI suggests new positions.
- Side: at or near the ask suggests buying; at the bid suggests selling.
- Sweep vs block: sweeps hit many exchanges fast (urgency); blocks are negotiated single prints.
- Expiry and strike: short-dated, out-of-the-money orders are more speculative.
Why it can mislead
A fund that owns shares may buy puts to hedge, and a call buyer may be closing a short. Spreads show up as separate legs. Treat unusual activity as a clue to research — never a signal to copy.
The Najarian approach
Jon and Pete Najarian popularized following unusual options activity on TV. Their emphasis: look for repeated, aggressive buying in short-dated options ahead of possible catalysts, then define your own risk.