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Strategies & Market Trends : Option Strategies

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From: Elroy	1/31/2024 8:35:39 AM
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I'm curious if anyone has an opinion on how overweighted options contracts outstanding in sort of illiquid stock affects likely price direction. Let me give an example. NGL is a small cap. Price about $6.00, It trades about 500,000 shares per day. So, for April 2024 there are...... 2,370 $5.00 calls outstanding 10,598 $7.50 calls outstanding 1,181 $5.00 puts outstanding 445 $7.50 puts outstanding So, there are a LOT more $7.50 April (three months away) calls than anything else, on a $6.00 stock. Since we don't know whether the person who put that trade on was a buyer or a seller, can we say anything about the likely direction of NGL between now and April given that spread of outstanding options for April? If so, what? Curious if anyone has opinions.

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