As stock option trading has become more popular and sophisticated, the jargon associated with options has expanded dramatically. For example, you may have heard traders refer to an “options sweep.”
A sweep is typically a large order that is broken into a number of different smaller orders that can then be filled more quickly on multiple exchanges. A sweep order instructs your broker to identify the best prices on the market, regardless of offer size, and fill your order piece-by-piece until the entire order has been filled.
These types of orders are especially useful for option traders who prefer speed over the lowest possible price.
There are two reasons why stock and option traders care when large sweep orders get placed in the options market.
- Sweeps are typically large blocks, meaning that the trader placing the order has some major financial backing.
- Sweep orders indicate that the buyer wants to take a position in a hurry, which could imply that he or she is anticipating a large move in the underlying stock’s share price in the very near future.
By keeping an eye out for large option trades, traders can get…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
