When retail investors watch recent buying and selling activity in the market, they typically can get a pretty strong view of what is happening behind the scenes at some of the industry’s largest funds and investment houses. However, reported institutional activity reflects the past, and not the recent one at that, so this information assumes the initial buy thesis has to still be valid for action to be taken on it.
There’s another, more efficient way to determine where the sentiment is today and where it might be headed in the future. By tracking unusual options activity, whether for put options (usually bearish) or for call options (usually bullish), investors know that the stakes are much higher due to the leverage and timing aspects associated with these financial products so that any big bet carries a lot more conviction than just buying shares of stock.
