If you look at the COT report for guidance in your trading, do you consider just futures contracts or do you look at the futures and options combined? Why?
If you look at the COT report for guidance in your trading, do you consider just futures contracts or do you look at the futures and options combined? Why? {image}
Ignored
The open interest and changes to open interest are the real "tell" for this report. It implies confidence of large commercial concerns as to what/when they think the next cycle will begin.
When you see open interest increasing but at smaller and smaller rates from one week to the next it means the participation is getting saturated and large concerns are going to start exiting open positions.
Whether those are futures or options is mostly irrelevant. Everyone who holds and open positions is going to want to exit in profit.
{quote} The open interest and changes to open interest are the real "tell" for this report. It implies confidence of large commercial concerns as to what/when they think the next cycle will begin. When you see open interest increasing but at smaller and smaller rates from one week to the next it means the participation is getting saturated and large concerns are going to start exiting open positions. Whether those are futures or options is mostly irrelevant. Everyone who holds and open positions is going to want to exit in profit.
Ignored
so .... institutions always need their options to finish ITM?
{quote} so .... institutions always need their options to finish ITM?
Ignored
Not necessarily...they can also sell the option at a profit before it expires. Exiting positions in options doesn't mean the always finish in the money...(this from someone who has never traded options). In addition, option positions is "implied commitment" it isn't an actual position until the option expires in the money.
Point being that the COT report (imo) is of better value when evaluating open interest and the rate of change in that interest.
I've actually been wondering about this myself. I look at Futures and Options since its all-inclusive, but I'm not 100% sure that's superior to Futures only.
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