Market Tide

Question

Market Tide

Accepted Answer

Market Tide is a proprietary tool that can be viewed from the Market Overview page. The Market Tide chart provides real time data based on a proprietary formula that examines market wide options activity and attempts to filter out ‘noise’ as it sees fit. To visualize options activity for an individual ticker see Net Flow. Using this data you can get a feel for how the options market is being traded.

https://i.imgur.com/Lv8yvpe.png

Market wide call and put activity is aggregated and the ‘net value’ is displayed using green (call) and red (put). The underlying price of SPY [SPDR S & P 500 ETF] (yellow) is overlaid against the net call and put values.

For example:
- $15,000 in calls transacted at the ask has the effect of increasing the daily net call premium by $15,000.

- $10,000 in calls transacted at the bid has the effect of decreasing the daily net call premium by $10,000.

The resulting net premium from both of these trades would be $5000 (+ $15,000 - $10,000).

Transactions taking place at the mid are not accounted for.

In theory:

The sentiment in the options market becomes increasingly bullish if:
1. The aggregated CALL PREMIUM is increasing at a faster rate.
2. The aggregated PUT PREMIUM is decreasing at a faster rate.

The sentiment in the options market becomes increasingly bearish if:
1. The aggregated CALL PREMIUM is decreasing at a faster rate.
2. The aggregated PUT PREMIUM is increasing at a faster rate.

Please reference the yellow tooltip on the Market Overview page for more information.

Note: each transaction has a |$2m| max contribution to the net premium.

Market Tide Resources:

The Market Tide charts are available on the website, but also as a command using both the Discord bot and Twitter bot. Use command `/market_tide`.

Twitter Video on the Net Flow Concept