Understanding Flow

 When utilizing flow we are following the mindset and belief that the smart money/big money knows something that we don’t and didn’t just drop millions of dollars in options playing a guessing game. Following that logic we can use their purchases as an indicator of potential future moves in the underlying stock. 

We use options flow to help determine stock sentiment but it can be tricky figuring out what the intentions of big money were when the trade was made. Options buys and sells come through the tape in many different forms and sizes and the buyer and seller’s objective isn’t always clear and without a strong grasp on reading the flow data trades can easily be misconstrued. With the help of our staff as well as our major, market, and rapid flow algorithms we are able to highlight specific orders and groups of orders that we determine are unusual and directionally aggressive.  These orders usually result in strong moves in the underlying stock.

 

What are Trade Types?

The Trade Types define the method of execution that was used by the buyer/seller.

Listed below are the different types of executions that can be displayed:

 

LATE: A trade that was the result of late reporting due to sets consolidating last.

AUTO: A common occurrence, trades that are executed electronically.

ISO: A trade that is an Intermarket sweep order. ISO’s are executed immediately and do not have to wait for the best bid and offer.

AUCT: A trade that was executed electronically but traded through a two-sided auction with an exposure period

ISO/AUCT: A trade that is an Intermarket sweep order that executed electronically and traded through a two-sided auction with an exposure period.

CROSS: A trade that was executed electronically and traded through a two-sided crossing mechanism with no exposure period.

CROSS/ISO: A trade that is an Intermarket sweep order that executed electronically through a two-sided crossing mechanism with no exposure period.

FLR: A trade that is not executed electronically but rather executed on a trading floor.

COB: A multi-leg order trade that is executed electronically through a complex order book.

COB/AUCT: A multi-leg order trade that is executed electronically through a two-sided action that goes through an exposure period in a complex order book.

SPRD/CROSS: A multi-leg order trade that is executed electronically through a two-sided crossing mechanism that does not go through an exposure period.

SPRD/FLR: A multi-leg order trade that is not executed electronically but rather executed on a trading floor against other multi-leg orders executed on a trading floor.

SPRD/LEG/AUTO: A multi-leg order trade that is executed electronically against single-leg orders/quotes.

SPRD/COB: A multi-leg order trade that is executed electronically through a two-sided auction that goes through an exposure period in a complex order book.

SPRD/LEG/AUCT: A multi-leg order trade that is executed electronically through a two-sided auction that goes through an exposure period and trades against single-leg orders/quotes.

SPRD/LEG/FLR: A multi-leg order trade that is not executed electronically but rather executed on a trading floor against single-leg orders/quotes.

TIED/AUTO: A multi-leg order trade that is executed electronically through a complex order book.

SPRD/CROSS/TIED: A multi-leg order trade that was executed electronically through a two-sided crossing mechanism that does not go through an exposure period.

TIED/FLR: A multi-leg order trade that is not executed electronically but rather executed on a trading floor in a complex order book.

SPRD/TIED/AUTO: A multi-leg order trade that is executed electronically against single-order orders/quotes.

SPRD/TIED/AUCT: A multi-leg order trade that is executed electronically through a two-sided auction with an exposure period and trades against single-leg orders/quotes.

SPRD/TIED/FLR: A multi-leg order trade that is not executed electronically but rather executed on a trading floor against single-leg orders/quotes.

SPRD/FLR/PP: A multi-leg order trade proprietary product with at least 3 legs that are not executed electronically, the price can be outside of the NBBO.