When investors try to gauge the market’s interest in a given stock, they can lean on recent buying activity as a reliable measure. However, this might not give them the entire picture. Buying or selling shares of a stock represents a relatively symmetrical bet and view of the underlying stock, and it might even be rebalancing or weighing for bigger asset managers out in the market with relatively tight mandates.
On the other hand, spotting unusual options activity in a stock can tell a completely different story for what might follow in the stock under consideration. Understanding that options offer a certain leverage multiplier can give investors a better idea of where the conviction lies for the stock in question.
