💪Build-A-Trader 0.1: Basics in Flow Hunting
The series that started it all is back with volume/open interest explained
In this edition we are going to focus on the Volume/OI ratio, including a brief explainer for all and some more detailed examples using real flow from YEET Plus. Video explainers for the first two lessons—and then each afterward—will be available on The YEET Plus Youtube w/ subscription, YEETv Plus.
🦻 Volume to OI Ratio: Your Market Gossip Detector
Imagine you’re at a party 🎉. You’ve been there for a while, and you know the usual crowd—your OI (Open Interest) buddies. They’ve been hanging out, sipping drinks, having normal convos (Kendrick vs Drake, their favorite YEET, etc). There are, more or less, the same amount of people at the party as you typically expect.
But suddenly, a whole new group of people storms in—way more than the usual guest list. That’s Volume (today’s flow action on a ticker) going wild. Now you gotta ask… WHY? 👀
Did someone just drop a juicy rumor?
Is something big about to happen?
Or is it just people coming and going, nothing major?
That’s what the Volume-to-OI ratio helps you figure out in the world of whale watching/ unusual options activity.
How to Use It to Find Breaking News Before It Drops
📌 If today’s Volume is WAY bigger than OI (Ratio > 1) → This means a ton of new contracts are being traded compared to what was already open. BIG MONEY is entering fresh positions. 🚨 New bets = something's up.
📌 If Volume is small compared to OI (Ratio < 0.5) → It’s mostly existing traders adjusting their positions. Not that exciting, just normal market noise.
📌 If Volume and OI are similar (Ratio ~1) → Could be new money, could be just position rolling. Gotta check the next day—if OI increases, it was fresh bets. If OI stays flat or drops, it was just people cashing out.