The Truth About Options Flow

As we kick off a new year, everyone is full of hope and excitement for what's to come. I've been talking to some of the flow traders in my trading network and as the new year kicked off, we all have a similar sentiment... There isn't a lot of longer term high quality options flow yet.

This sentiment brings me to two major points about unusual options flow trading. If you understand the first point, it will lead you into the second point. The two things I want to address are that watching an unusual options flow scanner is BORING! The second point coming out of that, and I'll tie the two together below, is that it is profitable because of this (72% of the callouts from our Discord group since its inception have been profitable).

So, how can it be profitable because it is boring? Let's start with the first part. Watching an unusual options flow scanner can be a long, slow process. A lot of times we are watching a ton of information that we are NOT going to be placing trades on. Watching all of this information for six and a half hours a day can be tiring. It can be tough on the eyes staring at a computer screen that isn't giving you actionable information. BUT... that's the point!

When I see actionable information come across the scanner, it sticks out. Because I'm watching a sea of data that is ignored, when something finally does catch my attention, it becomes obvious. These are the trades I'm sitting around waiting for. But, some days it can be a lot of sitting around and waiting. There are definitely days where I watch the scanner the entire day and don't see a single trade I want to take from it. But, then there are days where I might open seven or eight new positions from the scanner. So, you never know what kind of day it will be and just have to commit to being there to watch it all (or hang out in the Discord room and wait for the posts and alerts).

The reason I say it is a profitable system because it is boring is because out of that boredom, when a trade comes through, it is a trade idea that stands out in a sea of ignored data. The more you trade, the more likely you are to lose money. A lot of new traders are over trading, trying to find a ton of setups every day. If you sit back and accept the boredom of an unusual options flow scanner, only pouncing on the trades that finally stick out, what you're doing is limiting your trading to only those trades that really seem to have something different about them. The unusualness of these trades is what makes them profitable. Of course, not every trade from the scanner works out. But if you stick with only the trades that really break through the boredom, you'll find a profitable percentage of trades compared to the losers.

So, if you want to find a unique trade, backed by a hedge fund or big money trader, you can sort through the data from the scanner and really just sit back until you find something that stands out. While it may be boring to do so, the results in the long run speak for themselves. Since launching the Discord group to support the scanner, the lifetime call outs in that group are 72% profitable.

For numbers like that, I'll take the boredom!