The ‘Unusual Option Activity’ segment of CNBC’s “Fast Money: Halftime Report” prompts an “immediate spike in trading volume,” as investors react to commentators pointing to a few stocks with abnormally large option trades earlier in the day, according to the paper. Strong, who conducted the research at the university before joining the SEC last month, declined to comment on the findings. “Our findings suggest that the CNBC coverage of unusual option activity has a destabilizing effect on underlying stock prices and investors cannot profit by simply following the CNBC reporting on the ‘smart money,’” Washington State University finance professor George Jiang and Cuyler Strong of the Securities and Exchange Commission said in a June paper. In fact, make sure to take our options trading. The change is deemed unusual if it exceeds the average trading volume, and traders use this information to identify potential price movements and market trends. Unusual options activity (or UOA) can be a giveaway, so to speak, that there could be a significant move in the underlying stock shortly. Unusual Options Activity refers to a significant change in the trading volume of options contracts for a particular stock, index, or other financial instruments.
But, when activity on an option starts to look unusually high, it is a sign. Options trading may be a good predictor of stock returns - but investors should be wary of trying to profit from the unusual options activity regularly covered by CNBC’s “Fast Money,” according to researchers. Options are traded regularly in options markets no surprise there. Unusual options activity shows contracts which are trading at abnormal volume levels or price levels.
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