Ghost Education (Part 3)

I am in search of instruction on how to trade for profit, which this article’s title promised to be forthcoming. In 4+ paragraphs thus far, Terry Lane has failed to deliver on that promise. Today I will continue with the final paragraph:

> Options trade at higher volumes when the strike price is close
> to the current market price, as they are more likely to expire
> “in the money.”

This does not tell me how to trade for profit.

> An option trading at 200 percent or more than similar strike
> prices signals unusually high volume, according to Option
> Alpha.

Here is another article citation. Still in search of that secret to profit…

> Trading volume can be high because of news events, such as
> earnings or product launches, or from hedging by institutional
> investors.

Potential reasons for high volume do not tell me how to profit…

> When these events can’t discount the volume, it may signal
> that investors have reasons to be optimistic about the
> options and could be a buying opportunity.

That’s the end! No more. This must be therefore be the secret to profit: buy options traded in high volume without any apparent reason.

I should scrub the Options Alpha article to make sure I haven’t missed anything. As good writing practice, Lane should have highlighted relevant points from that article in his. I will double check.

The Option Alpha article is entitled “Learn How To Profit From Unusual And Abnormally High Options Trading Volume.” The article says three main reasons exist for high options volume: upcoming news, hedging, and uninformed retail investors.

I think these are possible reasons but how can we ever know? In order to know why options volume is high I would have to interview everyone who traded that option on the day in question. This can never be done since buyers and sellers are anonymous. The door is wide open to speculation and the financial media takes full advantage of this each and every day.

I will continue in the next post.