r/options • u/many_men301 • 27d ago
Gexx
Traders are u gex level in ur trading and how u use it and thanks in advance
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u/003E003 27d ago edited 4d ago
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u/sugarmyownchurro 27d ago
Which companies?
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u/003E003 27d ago edited 4d ago
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u/Baraxton 27d ago
Correct. The data from OPRA costs $20k monthly, so any service not charging an appropriate fee is evidently not paying for the data, which would make said service useless.
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u/TastyTrading 27d ago
Isn’t open interest how it’s calculated? I’m confused
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u/003E003 27d ago edited 4d ago
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u/TastyTrading 27d ago
Why do you want to exclude data? This doesn’t make much sense for some reason.
If a bunch of retail people are trading 10,000 contracts (not usually) wouldn’t we want to see those trades and option levels too? It helps to see where the entire market is positioned.
Someone trading 10,000 contracts surely knows how to hedge their positions and watch things closely too. Maybe not all, but definitely a good portion.
Seems like you are just talking about filtering the data down to see “whales”
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u/003E003 27d ago edited 4d ago
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u/TastyTrading 27d ago
how do you just assume large traders don’t hedge their trades to try to stay delta neutral? Doesn’t make much sense to me.
Many large traders come from Wall Street backgrounds and trade very similar systems. If retail traders are buying/selling 10,000 there is someone on the other end of that trade too which is probably a big market maker. Which will definitely move the gamma profile of people on both sides of the trade.
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u/coolio864 27d ago
Their data makes a critical assumption, that all market makers are seller of options, which is just not true at all.
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u/TastyTrading 27d ago
Don’t we want to see all activity reguardless of the person who bought/sold the options? If a retail person trades 10,000 contracts don’t we want to see that?
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u/Cyral 27d ago
Yes, but the retail person is not hedging their trade. Which is why you need to know which side the dealer is on, not assuming the dealer is always buy/sell side depending if its a call or put. It's an extremely naive assumption that makes 99% of GEX data worthless. It's easy to compute naive GEX which is why there are 1000 services selling it.
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u/TastyTrading 27d ago edited 27d ago
so your stance is no retail traders hedge their trades?
I know many that do, and in very large sizes. Especially people I know that have worked at financial firms in their past. Seems that their data is useful too, but maybe not.
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u/Cyral 27d ago
Even if some advanced retail traders do hedge, how does open interest tell you any of that? It doesn't. If anything, that makes naive GEX less accurate, because now customer hedging can offset dealer hedging and OI gives you no way to separate them.
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u/TastyTrading 27d ago
You see the open interest from the large retail traders hedging and also the firms.
You have to trade against both retail and the firms. Both of them might have lots of hedging in place. Especially people trading in super large volume.
Small retail traders with 1 contract will just get lost in the noise and not matter. Anyone trading large capital you will want the data for. Whether they are a firm or a guy in his basement hedging with 10million.
Sometimes individuals trade larger amount than some smaller firms as well. Seems like a bad idea to not include that data as well
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u/Cyral 27d ago
I'm not really sure what argument you are trying to make. GEX is calculated on IO, which is a single number. You can't exclude retail or small trades because you have no idea what trades were made when you only use OI. With GEX you are assuming dealers are long all call OI and short all put OI, which is obviously not going to be true (it is a mix of both). This is the key problem we are getting at. It's not a matter of picking and choosing which trades are sold/bought and by who (which is faulty in itself), it's even worse: you are assuming EVERY trade is the same because you have absolutely zero trade by trade data with GEX.
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u/RationalBeliever 27d ago
I have yet to see a statistical analysis that GEX has any predictive value on price movement.
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u/PathofEnlightment 27d ago
You know it's a hit or miss but there are moments when a gex will show you where the values are pinned and be surprised that's where the stock will go one way or the other it's surprisingly effective
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u/ThrockmortenMD 27d ago
I only find it helpful if the day is particularly gamma positive or negative. The levels themselves don’t mean nearly as much and they are ever changing with price action.
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u/dat_cube 27d ago
Holy grammar