fbpx

QQQ
+ 0.35
372.63
+ 0.09%
BTC/USD
-220.24
42590.33
-0.51%
DIA
+ 0.36
347.20
+ 0.1%
SPY
+ 0.78
442.40
+ 0.18%
TLT
-1.45
149.81
-0.98%
GLD
-0.19
163.70
-0.12%

Understanding Halliburton's Unusual Options Activity

July 30, 2021 2:49 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More

Halliburton (NYSE:HAL) shares experienced unusual options activity on Friday. The stock price moved down to $20.74 following the option alert.

  • Sentiment: BEARISH
  • Option Type: TRADE
  • Trade Type: CALL
  • Expiration Date: 2021-11-19
  • Strike Price: $23.00
  • Volume: 2001
  • Open Interest: 1909

Three Indications Of Unusual Options Activity

Exceptionally large volume (compared to historical averages) is one reason for which options market activity can be considered unusual. The volume of options activity refers to the number of contracts traded over a given time period. The number of unsettled contracts that have been traded, but not yet closed, is called open interest. These contracts are not yet closed because a buyer has not purchased the contract, or a seller has not sold it.

Another indicator of unusual options activity is the trading of a contract with an expiration date in the distant future. Additional time until a contract expires generally increases the potential for it to grow its time value and reach its strike price. It is important to consider time value because it represents the difference between the strike price and the value of the underlying asset.

Contracts with a strike price far from the underlying price are also considered unusual because they are defined as being “out of the money”. This occurs when the underlying price is under the strike price on a call option, or above the strike price on a put option. These trades are made because the underlying asset value is expected to change dramatically in the future, and the buyer or seller can take advantage of a greater profit margin.

Understanding Sentiment

Options are “bullish” when a call is purchased at/near ask price or a put is sold at/near bid price. Options are “bearish” when a call is sold at/near bid price or a put is bought at/near ask price.

These observations are made without knowing the investor’s true intent by purchasing these options contracts. The activity is suggestive of these strategies, but an observer cannot be sure if a bettor is playing the contract outright or if the options bettor is hedging a large underlying position in common stock. For the latter case, bullish options activity may be less meaningful than the exposure a large investor has on their short position in common stock.

Using These Strategies To Trade Options

Unusual options activity is an advantageous strategy that may greatly reward an investor if they are highly skilled, but for the less experienced trader, it should remain as another tool to make an educated investment decision while taking other observations into account.

For more information to understand options alerts, visit https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts

For the latest in financial news, exclusive stories, memes follow Benzinga on Twitter, Facebook & Instagram. For the best interviews, stock market talk & videos, subscribe to Benzinga Podcasts and our YouTube channel.

Posted-In:

Movers

Related Articles

Understanding Halliburton's Unusual Options Activity

Halliburton (NYSE:HAL) shares experienced unusual options activity on Wednesday. The stock price moved down to $20.19 following the option alert. read more

Understanding Halliburton's Unusual Options Activity

On Tuesday, shares of Halliburton (NYSE:HAL) saw unusual options activity. After the option alert, the stock price moved up to $20.25. read more

Stocks That Hit 52-Week Highs On Thursday

    Before 10 a.m. ET on Thursday, 86 companies set new 52-week highs. read more
The SPY, QQQ And DIA All Bounced Back Today. Here's Why.

The SPY, QQQ And DIA All Bounced Back Today. Here's Why.

U.S. indices were trading higher across the board Wednesday as stocks rebounded following recent selloffs. read more