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Most traders scanning option flow have no idea what they’re actually looking at. They see a big order come through, get excited and jump in — only to watch it go nowhere or worse, straight down.
The problem isn’t the data. The problem is they’re not filtering it correctly.
I use a specific framework for evaluating option activity, and it starts with one simple rule: If the option spike isn’t at least 2X the average volume, I’m not interested. Some names trade thin, some get busier around earnings, but the 2X threshold keeps me disciplined and focused on meaningful activity, not just a shot in the dark.
For example, if the average put volume is 648 contracts and the stock has traded 1,500 puts, that’s about a 2.5X multiple. That clears the bar and earns a deeper look to see if I want to get in.
And if you’re new to options or risk‑averse, avoid trading setups around earnings announcements — price reactions can be extreme, unpredictable and option premiums often collapse after results. Yes, I trade earnings all of the time, but it’s a gamble and you could lose everything invested.
I’m OK with that when I get into a position, but that’s me, and most people don’t have the same risk tolerance.
Volume Alone Isn’t Enough
You need quality confirmation, and I start with sentiment. If a put is bought at the money and above the ask, that’s conviction. Then I check volume versus open interest. If volume is triple open interest, it’s likely fresh positioning.
That’s what you want.
But I don’t stop at one strike. When I see multiple strikes all showing the same directional bias hitting one of my scanners — like clusters of calls hitting the $40, $44, $46 and $50 lines — that’s real confirmation. That tells me it’s coordinated, not random.
Now let’s run through some other notes to consider…
Not all big put buys signal bearish bets. Some are just portfolio protection. If they appear right before earnings and open interest is already elevated, they’re often hedges. Look for fresh volume to open interest for true intent.
Caution: Check the bid/ask before entering. If it’s wide, you risk overpaying or giving back profits. Sometimes the smartest move is skipping the trade entirely.
Option Expiry Sensitivity: Short‑term options react fastest to order flow but decay quickly. Longer‑term expirations move slower and can be better for traders who don’t want rapid premium swings.
Position-Sizing Thought: Favor contract prices that let you diversify. I’d rather take several contracts of a cheaper option than sink all capital into one expensive strike.
Market Maker Hedging: Significant hedging pressure means dealers have to adjust quickly, increasing the potential for outsized moves and confirming institutional conviction.
Volatility Reminder: Holding through earnings? Watch for the volatility crush. Even if direction is right, collapsing implied volatility can drain premium.
Workflow Tip: Set alerts at your exit targets. It keeps you from babysitting charts and helps you act instantly when your levels hit. I do NOT set stop losses — which is another reason I prefer cheap options around $1.00 or less a contract.
How I Lock In Gains: I typically trim at 20-25%, lock in more at 50% and keep a small portion as a runner for potential bigger moves.
Quick Expiration Guide: Many platforms display contracts with a date‑month‑year code. Knowing how expirations are labeled on whatever platform you’re on helps you avoid confusion when scanning flow.
Start using all of this info together and you’ll instantly start separating noise from real opportunities.
Order Flow:
This is for informational and educational purposes only. These are not official alerts issued by Lance, but rather some interesting orders picked by the team at Lance Ippolito Trading.
When you look at these plays, always take the market maker move into consideration.
You can be right on the direction but still lose money if the stock doesn’t move enough. That’s where the market maker move comes in clutch.
With puts, they’re often downside hedges in case a stock tanks, especially around earnings. The further out of the money they are, the more likely they are to be hedges.
Also be sure and check when the company’s earnings date is because many of the plays we post here are centered around earnings!
If a stock is really expensive, consider a spread to lower the cost.
And finally, always remember the golden rule when it comes to buying calls: Buy dips, sell rips — and don’t chase!
If a stock’s moved a ton already today, maybe wait for a pullback.
There is inherent risk in trading. Trade at your own risk.
Note: If no date is listed after the month, it’s the monthly expiration (third Friday).
The team at Lance Ippolito Trading
Lance doesn’t want the CCP spying on him, so you’ll never find him on TikTok. Same goes for other social media sites, which are filled with impersonators, scammers and crypto bros.
You can only find him on his personal YouTube Channel — smash that Subscribe button! https://www.youtube.com/@LanceIppolito
And in his private Telegram channel: https://t.me/+-gVwEIwGJhplMTgx
Important Note: No one from the team at Lance Ippolito Trading, New Money Crew or any of its associated brands will ever contact you directly on Telegram.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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We develop tools and strategies to the best of our ability, but no one can guarantee the future. There is always a risk of loss when trading. past performance is not indicative of future results. Stated results are from Live tracked signals From 2/25/26 to 4/25/2026. The win rate has been 89% on the options with an average return of 80% over a two-day hold time.
