Volume is what drives the entire market, and that is a fact that often gets lost in the sea of indicators, patterns, and trend lines that dominate today’s concept of analysis. However, most investors fail to realize that these indicators and patterns are nothing more than price action recognition, and what drives price action is volume.
So, at the end of the day, those who understand volume understand where and when a stock or exchange-traded fund (ETF) might start to move. Today, it isn’t just any regular volume that stands out; it is call option volume, which is important due to its implications for the underlying stocks. Call options only pay off if a stock moves to a certain price by a certain date. Higher stakes mean higher conviction levels.
