MRO bought 22,000+ April 10 calls at the close. Unusual Call Volume, Did it Work? Truth?
Before, everyone thought Volume was a great way to determine what the professional traders are doing. Now everyone is trading options in order to have limited risk and not allocated too much margin towards a trade. In the option world, everyone now looks at Unusual Call and Unusual Put Volume like they did with volume. When someone buys or sells a huge amount of an option trade, everyone instantly thinks that person knows something and the stock is going to move appropriately.
On Jan 12, $MRO Marathon Oil, had unusual Call activity. Someone bought 22,000+ April 10 calls at the close. A lot of people saw this and entered the trade because they think that person knows something.
Words and other people’s activities mean nothing unless the price moves. As a result, lets look at the chart:
Here is the daily Ichimoku chart provided by eSignal. Notice, price is trending towards and is NOT at a support at all.
Below is the weekly chart: There is no support on this time frame either.
Below is the Quarterly chart. It shows there support from years ago where we could possible hold. Lets now examine the lower time frames to see if there is a multiple time frame support where maybe this trader could be thinking bullish. However, this is Quarterly…2 to 5 year time projection. Anything can happen during this time.
Below is the 30m time frame. When it got to the Quarterly support. At the time of the Call option trade…there still was no support. There was a resistance but definitely not a support.
In general, this was WRONG. It does not make sense why you would follow this trader. Remember, retail traders can trade with huge volumes now with online brokers. Maybe this is a retailer trader. If it is…retail traders are 98% wrong majority of the time. This stat is mainly because a lot of them are still fundamental based. To me, it seems like this trader to trying to pick the bottom without technical analysis. This is why this is a STUPID trade. Yes,,I said it!
This is like you jumping in front of a train going a 100 mph at you and you think it will stop right where you are standing because they see you. Good luck for the traders that took this trade with this crazy trader. We are here to trade high probability setup, not to gamble.
Unusual Call/Put volume with technical supporting it is high probability. This is why we setup our scanner to filter out the Unusual Call/Put with Ichimoku technical. We only see the “real” opportunities, not the fake.
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