You see a $2M call sweep on a stock. Looks institutional. You buy calls. Stock goes nowhere or fades. You get stopped out. A week later it rips 12%. This happened to me constantly. I blamed the service, blamed the market, blamed myself. Then I looked at when the big flow alerts actually worked vs when they were traps. The pattern was uncomfortable: when a stock already had RSI above 70 and was up 5%+ on the week, the big flow almost never led to a profitable entry. Win rate was around 50%, basically coin flip. When the same size flow came in on a stock that was NOT already running, RSI between 55 and 65, consolidating or just starting to move, win rate was completely different.
The reason makes sense once you see it. The alert hitting your screen is not when the smart money entered. They were in days or weeks before. By the time the $2M sweep shows up on a retail flow service, you are buying into a position they may already be trimming. The stock is extended because THEY ran it up. The only time the flow alert is actually in front of the move is when the stock has not moved yet. So now before I act on any flow alert I check one thing first. Is this stock already running or is it still quiet? If it is already extended I skip it no matter how big the premium is. Completely changed my results following flow.
Anyone else noticed this or have a different way of filtering it?
Big options flow alerts are a trap unless the stock meets this one condition
byu/ShelterBubbly7854 inoptions
Posted by ShelterBubbly7854