Clues From Options, After Hours/Before Hours Trading, The 1980's and Now:
I used to trade in the early '80's, with some success. Since retiring a few years back, I have started trading anew. Most things are the same or very similar, some things have morphed, and there are a few new wrinkles.
Back when, I was able to detect insider trading and benefit from it. Back when, insider trading was pretty much out in the open. The unusual trades were mostly done during normal session hours and the trades in actual shares. Back when, insider activity usually left a window of 15 minutes to a half hour to get on board to surf with them (the insiders). There were SEC, insider cases brought, but not many. The activity was pretty wide spread and the SEC only went after a handful of the most egregious players.
Today, I believe that insiders have learned new tricks. They have morphed their activities. Somewhat harder to detect, and mostly out of sight from retail investors. The SEC has gotten a real good handle on insider activities that were prevalent in the '80's, but the new tricks--don't think so.
Trick 1: Utilize the after and before market hours trading to position oneself. In some cases, traders can go 24/7. But, normal extended hours trading is sufficient for most. Retail traders do not normally utilize extended hours trading. Back when, a stock usually closed at price "A", and opened at price "A". Nowadays, much of the big moves for a given day are done before market open. Most stocks close at price "A" and open "Anywhere But A". Its a no brainer when one considers that market hours are a fraction of total hours, and market moving events are not constrained to normal market hours.
I think this phenomenon has led to many traders/investors not wanting to be out of a security for fear of missing that "once in a great while" huge gap up. I have heard that argument on this board concerning NNVC.
Trick 2: Utilize options or other derivatives. I was reading on CNBC that there was highly suspicious options activity recently with Puma Biotech. I read an article recently about some academics that had done a study and found unusual options trading out of proportion concerning real price moving events. I know that several traders and advisors review options chains for clues as to future price sentiment.
Since most us retailers do not use options, we are usually oblivious to this highly leveraged form of price speculation.
I do check NNVC options chains once in awhile, just to get a sentiment checkup. I don't do it often, so I would probably miss any real insider activity.
Tonight I took a look-see. Found it very interesting that Put (betting on lower future prices) interest is very small compared with Call (betting on higher future prices) interest. What I saw is no guarantee of future higher prices, but smart options investors predominately think so, and have put their money on the line.
If interested take a look for yourself. I used the NASDAQ site. It's easy to navigate.
Much of the outsized options positions are set to expire in September and December. A pretty good timeframe. Many on this board have postulated the beginning of TOX in Sept., Oct., or Dec. this year.
One newer wrinkle I have been observing is really contrary to what used to be in the '80's. In the 80's, oft times a stock would unexpectedly run up before news would break. This often occurred near market close. Often, these run ups would start days in advance. Nowadays, it appears that stocks are often near their cycle lows before that good news event hits. Take a look at Puma's chart. Makes sense if insiders can do their business through options or after/before market opens. Also, makes me want to be a better technical trader.
Still there are some clues to some activities, such as recent NNVC accumulations due to the Russell rebalance. Also, will occur if, when institutions are establishing or increasing positions.
Just found this interesting.
AI
