On May 29th 2024 I shared a stocks trading confluence strategy play for $CRDO on my StockTwits Profile after it had appeared on the xBratTM Stocks Predator Confluence Scanner with Unusual Options Activity and Technical Signals from the xBratAlgoTM. At the bottom of this post, you will see how this stock moved!
The Confluence scanner looks at 11,000 US Stocks and ETFS everyday. And finds those that are in confluence with Unusual Options Activity (UOA), xBratAlgoTM Technical Trading Signals and or Insider Activity. This software has been designed with my Book “Confluence Not Coincidence” in mind.
Unusual Options Activity (UOA) with Stocks Trading Confluence Strategy
Unusual Options Activity (UOA) refers to the significant increase or decrease in the volume of options contracts traded for a particular stock, compared to its historical averages. This spike in activity can signal potential movements in the underlying stock’s price. Key metrics to watch include Open Interest and Implied Volatility. Open Interest represents the total number of outstanding options contracts for a specific strike price and expiration date.
When there’s a sudden surge in open interest, it suggests that traders are placing new bets on the stock. Indicating possible insider knowledge or strong market sentiment. Implied Volatility, on the other hand, measures the market’s forecast of a stock’s future volatility. A sharp rise in implied volatility often accompanies unusual options activity, reflecting increased uncertainty or anticipated events that could impact the stock’s price.
xBratAlgoTM Technical Signals
The xBratAlgoTM trading indicator functions by encapsulating the thought process of an experienced trader’s Brain (that will be me!) into an efficient, algorithm-based system. This indicator assesses multiple “Decision Points” (totaling 12) related to various market conditions and trading signals. The algorithm simplifies this complex evaluation by processing these decision points in the background, ensuring charts remain clutter-free. The xBratAlgoTM then prints the signal along with a star rating (from 3* to 6*), indicating the trade’s quality based on how many decision points are met. This way, traders of all experience levels can access a sophisticated trading strategy without the need for detailed manual analysis.
In this situation with $CRDO, all 12 points of control were met and so it was a 6* BUY Signal.
Confluence Unusual Options Activity and xBratAlgoTM
Incorporating Unusual Options Activity into a stocks trading confluence trading strategy involves using it alongside other technical and fundamental signals to enhance decision-making. For example, if UOA is observed in a stock already identified by technical indicators such as the xBratAlgoTM 6* BUY Signal for $CRDO, it can provide stronger confirmation for entering a trade.
The Screenshot below is taken from the xBrat Stocks Predator. The inset Confluence scanner with colored dots on the chart shows $CRDO Highlighted. The chart shows the xBratAlgoTM 6* BUY Signal and on the left highlighted in Red is the Unusual Options Activity scan results for $CRDO with an expiration date on the Calls being 19/07/2024.
The Resulting Stocks Trade behaved well and more!
As of writing this article on the 6th of June 2024 the $CRDO Stock price closed at $26.16. Showing a $5 gain on a $20 Dollar Stock just goes to show Confluences really play a key roll in successful stocks trading. As per the chart below. Using technology to find confluences with sophisticated Technical Indicators and Unusual Options Activity saves time.
It’s not about the quantity of trades, it’s about the quality! Check out the xBratTM Stocks Predator HERE
