In options trading, a sweep is typically a large order that is broken into several different smaller orders that can then be filled more speedily on many different exchanges. A sweep order instructs your broker to identify the best prices on the market, regardless of offer size, and fill your order bit-by-bit until the whole order has been filled.
These types of orders are particularly useful for option traders who favour speed over the lowest possible price.
There are two reasons why stock and option traders pay attention when large sweep orders get placed in the options market.
- Sweeps are typically large blocks, meaning that the trader who placed the order has some major financial backing.
- Sweep orders indicate that the buyer wanted to take a position fast, which could imply that they are anticipating a large move in the underlying stock’s price in the very near future.
Use ADVFN’s Options Flow to track option trades for the US market.
By keeping an eye out for large option trades, traders can get a feel for what market high-rollers are thinking ahead of potential stock catalysts.
Remember, options trading involves risks, including the potential loss of your invested capital. It’s crucial to conduct thorough research, seek professional advice if needed, and start with small, manageable positions as you gain experience and confidence in trading options.