CHAPTER TWO REFINEMENTS IN VOLUME SPREAD ANALYSIS. Volume Surges in Related Markets. If you are an experienced marketmaker or floor trader, you can read the market as it flows along fairly well. As soon as you see either strength or weakness appearing in the cash markets you are immediately thinking of trading the option markets to cover positions or to improve your trading position. | CHAPTER TWO REFINEMENTS IN VOLUME SPREAD ANALYSIS Volume Surges in Related Markets If you are an experienced marketmaker or floor trader you can read the market as it flows along fairly well. As soon as you see either strength or weakness appearing in the cash markets you are immediately thinking of trading the option markets to cover positions or to improve your trading position. As this activity is recorded as total option volume we have something to work with. We will know that with a sudden high option volume day professional money is certainly active. If they are active then they will have a good reasons. The following charts will show you a few examples of this. Chart 15. FTSE100. Volume has been removed and replaced with total option volume reveling some interesting activity from market makers and other professional traders mostly right on the tops and bottoms of substantial moves. Option volume is available with many data feeds. It can also be found in the financial section of many newspapers. Even information separating the number of calls and puts traded on any particular day is available. At first glance this information seems to be worth a serious look at even an opportunity to figure out which way the market might be heading. The implication being is that if professional money is trading in a large 43 number of puts the market should go down. A large number of calls and the market should go up. After reading this book as far as this page you are becoming fully aware that what we see or told is never as rosy as it may look and not even true. There is always one thing you can rely on in the stock market and that is they are unlikely to allow out a great deal of information that is going to be of any real value to the general public. As they are self regulated we continue to take the view that they are not out to help you in any way. A study of puts and calls on their own can be a very misleading exercise because professional traders use options mainly to
