Many market pundits, data services, and online brokerage platforms will highlight unusual options activity. On many occasions, I've received tweets that suggest that some readers and viewers mistake market data, color, and commentary as trade recommendations. Just because someone describes unusual activity doesn't mean that they are trading those instruments themselves, or recommending it to others. Rather, investors should incorporate information about trading activity into the broader mosaic of their investment process as an additional data point that provides some perspective on what other investors may be thinking. In this article, I'll discuss what constitutes unusual activity, what observers should focus on, and how self-directed traders and investors can begin to decipher from it.
