Incase you don’t understand what BidDiddler meant by “pulling bids after 3pm”… The option expiry @ 1.2100 which expired at 3pm UK Time was a vanilla option… in short, for the premium to be paid out, price had to stay above the 1.2100 handle before it expired in order for the option to pay out.
So the option owner would try to defend the 1.2100 level (I did this on many occasions at Barclay’s… and very successfully to I may add ) would literally through the kitchen sink at the market to keep it up, as others try to force it below so they don’t have to pay the premium. Therefore a lot of money on bids above 1.2100 would have been placed in the last 5-10 minutes before expiry to form a barrier (option barrier) against the sellers… as the option matures, and the owner gets their payout… then then delete the protection bids above 1.2100… there for if they are fast enough… any sell orders and offers that are still there, force price down and below the 1.2100.
Understand?
Many people call this the London reversal… or profit taking… but that’s only because they don’t have a clue what there talking about, or whats actually going on in the market!
Thanks Dave you have converted me to an order flow trader!!! I love it. After the option expired I assume a short below the price would be also some easy pips if price is at or near the strike price?
I don’t trade the buy stops and sell stops. I only trade the bids and offers and barriers. Usually the buy/sell stops are small and are only there to coax price along to the next batch of bis/offers/barriers.
Hi S2S,
You retro trader!
Your GU zone is similar to mine - whether its accurate or not I do not know. The 100 looks great to act as res in the zone as we wait for PA entry setup.
I have a feeling though the zone will move come tmrw morning.
Happy trading
BooDiddly
Dave: One more question on your order flow trading around the option strike price? I assume you do one trade a day on this near the option expiry time of 10am EDT or 3pm London time? For example todays option you traded had a strike price of 1.21 and close to expiry price action came down to test that level and popped up .So do you only trade around the option cut off time and on first test of the level?
I should really point out… that if your in the UK and trade/bet via a Financial Spread Betting company (which I don’t recommend), then if your doing the order flow scalping, they may close your account down, if your stakes are high and repeatedly do it. SB firms do not like scalpers… especially high stakes ones.
An SB firm is effectively a bookie, and not a broker.
So do keep that in mind, as I remember some people here say they trade via SB fimrs.
I normally trade the very first test of the day at the barrier and then again if price is there towards the close… last 20 minutes. Not all the time will price be near the barrier at the close… some times its very well defended and can be 30-40-50 pips away.
As I aid before, I have a buddy in the States who is a prop trader… he trades the flow of the EUR/USD and S&P only. Makes seven figure sums each year doing it.
Took one more quick trade for 6 pips off the low and bid at 1.2080 on this last touch prior to it breaking lower!! Done now as this has been a good pip filled day!!
) would literally through the kitchen sink at the market to keep it up, as others try to force it below so they don’t have to pay the premium. Therefore a lot of money on bids above 1.2100 would have been placed in the last 5-10 minutes before expiry to form a barrier (option barrier) against the sellers… as the option matures, and the owner gets their payout… then then delete the protection bids above 1.2100… there for if they are fast enough… any sell orders and offers that are still there, force price down and below the 1.2100.
