How to tell if an option is bought or sold? - futures io
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How to tell if an option is bought or sold?


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How to tell if an option is bought or sold?

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  #1 (permalink)
 telco 
Glendale, WI
 
 
Posts: 20 since Oct 2011

Sometimes you can go back to and try to guess from time and sales if the trade was done on the bid or ask.

I would like to know if there is a service that tells you exact orders as they are initiated. So is someone buying or selling calls or puts instead of trying to guess.

Is this only available with level 3 quotes? A member on support at an IB hinted that there are services that offer this, but couldn't tell me a name...

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  #3 (permalink)
 ab456 
New Delhi, India
 
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telco View Post
Sometimes you can go back to and try to guess from time and sales if the trade was done on the bid or ask.

I would like to know if there is a service that tells you exact orders as they are initiated. So is someone buying or selling calls or puts instead of trying to guess.

Is this only available with level 3 quotes? A member on support at an IB hinted that there are services that offer this, but couldn't tell me a name...


telco, there is a counter party to every single trade. So when some one is selling an options contract, there is another guy who is buying it. Buying and selling are always equal and opposite.

If you just want to know if a trade was done at the bid or ask, then that could be done with proper datafeed and trading platform that supports such studies/indicators. There are many including Market Delta and Ninja Trader.

If you are just looking for some services which Labels / Marks each trade as a Buy or Sell trade, then I am sorry, I am not aware of that.

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  #4 (permalink)
 telco 
Glendale, WI
 
 
Posts: 20 since Oct 2011

Yes I know that is how trading works.

I meant I want to know if it is traded on the bid/ask and if it is a position to open or close for the trader hitting the bid/ask.

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  #5 (permalink)
 ab456 
New Delhi, India
 
Experience: Intermediate
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Trading: ES,Stocks, Futures
 
Posts: 165 since Sep 2011
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telco View Post
Yes I know that is how trading works.

I meant I want to know if it is traded on the bid/ask and if it is a position to open or close for the trader hitting the bid/ask.

telco, the first part is certainly possible. But the second part is very tricky. I do not think it is possible to know if a particular trade was for Opening of a New Position or was it Closing of an Old Position. Because for doing that kind of analysis you need to take Open Interest into consideration and such open interest data is not available tick by tick.

As you must be very well knowing that in futures and options market, Buying could be of 2 types - New Long or Short Covering. Same way, Selling too could be of 2 types - New Shorts or Long Liquidation.

And there is no straight forward way to differentiate between these 2 types of buying/selling on a trade by trade basis, as you are asking - "if it is a position to open or close for the trader hitting the bid/ask".

You will find many guys who CLAIM to know when new positions are being opened and when old positions are being closed in real time, just based on the cumulative delta type of studies. But I think all that stuff is based on their assumptions and does not have any sound logic.

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  #6 (permalink)
 telco 
Glendale, WI
 
 
Posts: 20 since Oct 2011

I can tell you for a fact that level 3 quotes show exactly what I want and are available to market makers and brokerage firms. They also show stops.

I have a few floor people I can refer to for this information on an intermittent basis, but I can't get it as a live stream. What I'm looking for is basically a service for level 3 quotes that doesn't require you to be an MM or brokerage.

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  #7 (permalink)
 VeloxPro 
Israel
 
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ab456 View Post
telco, there is a counter party to every single trade. So when some one is selling an options contract, there is another guy who is buying it. Buying and selling are always equal and opposite.

If you just want to know if a trade was done at the bid or ask, then that could be done with proper datafeed and trading platform that supports such studies/indicators. There are many including Market Delta and Ninja Trader.

If you are just looking for some services which Labels / Marks each trade as a Buy or Sell trade, then I am sorry, I am not aware of that.

It is still interesting to know how the counter party split. It is one thing to have 1000 contracts buy to open by one party that meets 100 counter parties selling to open 10 each or 1 party selling to open 1000. This has a totally different interpretation

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  #8 (permalink)
 ab456 
New Delhi, India
 
Experience: Intermediate
Platform: SierraChart NinjaTrader,
Trading: ES,Stocks, Futures
 
Posts: 165 since Sep 2011
Thanks: 733 given, 102 received


VeloxPro View Post
It is still interesting to know how the counter party split. It is one thing to have 1000 contracts buy to open by one party that meets 100 counter parties selling to open 10 each or 1 party selling to open 1000. This has a totally different interpretation

That will be almost impossible to know, because of the Order Shredding Tools being used for placing the orders into the market.

Regards

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