The Complete Guide to Call and Put Sweeps in the Stock Market.
Introduction: What is a Call Sweep?
You probably hear this on Twitter, Stocktwits and Discord Chatrooms, “I just saw a Call Sweep for $TSLA”. Traders refer to an “options sweep, call sweeps or put sweeps” but what does this really mean and in particular is a Call Sweep Good or Bad? A sweep is typically a large order that is broken into a number of different smaller orders that can then be filled more quickly on multiple exchanges.
Is a Call Sweep Good or Bad?
A call sweep can be both a good and a bad thing depending on what side of the trade you are on. If you are on the long side for example $TSLA, you are betting that the stock/equity will continue going up. In this case a call sweep coming in for a large amount of premium/value would be good for you.
The reason this would be good is because there is a trader/investor or large hedge fund who believes that the stock will continue going up and is willing to bet money against it. Not only are they willing to put money on this trade, it is the method they are doing it. They are breaking up the order into pieces, going through all exchanges to get a fill, this usually entails they are wanting to get the order filled immediately, in comparison to choosing a limit order with a route for example (ARCA or LSPT). These are exchanges where orders are being routed, when a sweep occurs, this is going through multi-exchanges, it is trying to grab all of the availability from all exchanges.
They want this ordered filled as fast as possible, experienced traders/hedge funds do not do multi-exchange orders unless they are wanting to enter a trade immediately. They are not like the average joe, hitting market orders using Robinhood.
What are the Best Ways to Find Call and Put Sweeps?
The best method to find a call and put sweep is by using an Unusual Options activity platform, there are many of them out there but the one that is best geared for retail traders to track unusual options activity and provide clear insights on smart money flow is SweepCast.com. They offer best in class and have very high reviews on TrustPilot (100% 5 Star Reviews) at the time that this article was written.
Conclusion: Should you follow Call and Put Sweeps?
It is definitely one of the best ways to understand where the money is flowing in the options market, by using Unusual Options Activity you can get more confirmations on the trades you are taking. Always use your best judgement and take this a data point to help guide your decision making in trading.