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|User Info||How to read high volume on a specific option strike?; entered at 2012-05-29 09:40:07|
Registered: 2008-03-15 Sydney
Large volumes in out of the money strikes, especially massively out of the money strikes can mean insider trades.|
More frequently, however, large volumes in a specific strike tend to be the result of broker trades - i.e. someone says "give me a market on XYZ" and hits up a market maker. Usually the bigger ones are spreads of some description (between strikes, expiries or even between related stocks), but otherwise they may be attempting to protect the risk on a large stock position or speculating due to a trading strategy.
Positions of such size trouble the risk desks of both sides - the market maker will try to hedge the risk throughout the market in any way it can find, the market taker hopefully has a plan for the risk taken on.