Using Options To Help Predict Big Market Moves

| October 21, 2021

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Options order flow, particular large or unusual block trades, can potentially help traders predict where a big market move may occur.  Large traders will often use options on ETFs in order to take a directional position on a major asset class or industry.  For example, using the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), we can see a large put spread was purchased with a March expiration.  This could be a speculative bet or hedge related to rising interest rates. Higher rates could cause corporate bond prices (and LQD) to fall.

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This article originally appeared at Investors Alley

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Category: Options Trading

About the Author ()

Adrian Collins works as an Outreach Manager at Option Dash. Option Dash is always looking forward to offering the best covered call and cash secured put screener on the internet. Adrian is passionate about spreading knowledge on stock and options trading for the rising investors.