Why Options Are Critical in Stock Surveillance and Market Intelligence
15. Februar 2016
It has been suggested by one of my peers in the industry that, “options are an unreliable surveillance device for your stock.” Well, I couldn’t disagree more, and over the course of the next few paragraphs intend to give you evidence as to why they are not only extremely “reliable,” but are in fact “instrumental” surveillance devices.
Options are financial derivative products, and thus by their very nature their values are derived from the underlying equity securities they represent. Even if an option doesn’t trade a great deal of volume, it still provides clues and details – at least to those with the expertise to interpret them correctly – as to what investors’ expectations are about the future value of the underlying common equity. It is this kind of analysis that I’d like to explore in more depth.