Options Analysis
Moomoo’s option chain and Volume/open interest analysis are some of the important tools I use for me to make well informed trades.
lets Start:
1. We know that MSFT will be releasing earnings on 25 apr. Premiums will be juicier with high implied volatility. A peek on vol and OI tell us what traders are thinking.
i) at the $285 level, we see that vol increased while OI decreased. This tells us that traders are liquidating positions. there is less interest at this level.
ii) volume and OI spiked between 290 to 305, especially at the 305 level. This gives us an insight that traders are expecting price to hover around this level after earnings, which is bullish.
iii) bid-ask spreads are tighter with higher volumes. this also mean it will be easier to sell and buy at these levels
iv) volume and OI that rise and fall together tell us that MSFT is not speculative in nature, which translates to higher volatility and riskiness. A risky stock will see high volumes with low OI.
2. Option Chain
My personal preference is to sell options at 20-30% delta. Since I deduced that the market js generally bullish on earnings, It will be proper for me to sell puts at 275 strike price, which translates to about 5% return on a per annual basis.
#option feature tester
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