Insider Option Flow Tracker

Overview

This pillar identifies unusual, repeated options activity in thinly traded stocks, potentially signaling that someone has advance knowledge of a major corporate event. It's designed to detect subtle 'smart money' footprints before they become obvious news.

What It Does

The analysis scans the entire options market for specific patterns: small, consistent purchases of out-of-the-money calls or puts on stocks that normally have very low options volume. It filters out random noise and large institutional trades to focus on activity that suggests a concerted, under-the-radar bet. The pillar then flags these patterns, especially when they occur in the weeks leading up to a known catalyst like an earnings report or a potential merger.

Why It Matters

This provides a powerful early warning signal for significant, price-moving events. While most flow trackers focus on large block trades, this pillar's edge comes from spotting the quiet, deliberate accumulation by traders who may be trying to avoid detection.

How It Works

First, the system scans daily options data, filtering for stocks with low average daily options volume. It then identifies repeated, small-lot purchases of the same option contract over several consecutive days. Finally, it calculates the total premium spent relative to the stock's market capitalization to gauge the bet's significance and assigns a signal strength score.

Methodology

The model screens for stocks with an average daily options volume below the 20th percentile of the market. It flags any single-sided contract, call or put, that sees buy-side volume for 3 or more consecutive days in lot sizes under 10 contracts per trade. The core metric is a 'Conviction Score', calculated as (Total Premium Paid / Stock Market Cap) * (Number of Repeat Buying Days), focusing on a 30-day look-back window.

Edge & Advantage

This pillar detects subtle buying patterns that large-scale flow trackers often miss, providing a potential signal of informed trading activity before it becomes public knowledge.

Key Indicators

• Illiquid Call Activity

  high

  Unusual volume in call options for stocks that typically have low options trading activity.

• Repeat Buyer Signal

  high

  Identifies patterns of small, consistent purchases of the same option contract over multiple days.

• Premium/MarketCap Ratio

  medium

  Measures the size of the options bet relative to the company's total market value to gauge conviction.

Data Sources

• OPRA (Options Price Reporting Authority)

  Provides real-time, consolidated options market data from US exchanges.

• Cboe Global Markets

  Primary source for options contract specifications, volume, and open interest data.

Example Questions This Pillar Answers

• → Will company XYZ be acquired before December 31st?
• → Will ACME Corp's stock price increase by more than 20% in the week after its earnings report?
• → Will the FDA approve Drug ABC's new application by its PDUFA date?

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