We introduce Net Flow - an advanced tool for traders who use premiums to analyse the options market, track the price movements of an underlying asset and assess the strength of a particular market trend. First of all you need to decide and choose an underlying asset, for example BTC or ETH. Once you've selected an asset, you can start to track the option premium flow to get an idea of how prices are likely to move and where the market's heading.
Why the Net Flow is important:
The term ‘net flow’ in options refers to the difference between the value (premiums) of options bought and sold. A positive net flow indicates an increase in buying (bullish sentiment), while a negative net flow indicates that bears are becoming more active in the market. We use the following formulas:
Net Call Premium (NCP)* = Buy Call Premium - Sell Call Premium * over the past 24 hours | |||||||
Net Put Premium* (NPP) = Buy Put Premium - Sell Put Premium * over the past 24 hours | |||||||
Analysing the net flow of calls versus puts can be useful not only for the options trader. Options, being a complex financial instrument, are mainly used to guess how the market will behave in the long term, which we believe can be useful to know for the average trader who trades in spot/futures markets. For example, spikes in net flows for a particular underlying asset could signal a correction or the start of a new trend.
How to analyze net flow across exchanges:
If you want to analyze net flow across exchanges, simply change the view by using the "View" button.
Future improvements:
We will continue to improve this section and plan to add alerts and other features in the future to help you respond to market changes in a timely manner. If you have any specific requests, please contact us via X or Telegam.
Understanding the layout:
In the main Net Flow section we have placed a Net Call Premium vs. Net Put Premium chart showing the net flow of options over the last three days with a five minute time frame. If you wish, you can switch to the daily chart to analyse the data over a longer period. On the right, we have placed a table of options by net premium to help you understand which options contracts and exchanges are contributing the most to market dynamics. Below this, we have arranged charts of options premium flow by strike and expiration.
Calls vs Puts:
A positive Net Call Premium indicates that traders are buying more calls than they are selling, and therefore expect the price to rise. A negative NCP, on the other hand, suggests that traders are preparing for a fall and want to capitalise on it.
A positive Net Put Premium indicates that traders are buying more puts, betting that the price of the underlying asset will fall. A negative NPP signals that traders are getting rid of puts in preparation for a market reversal.
Strategies:
Net Premium Flow can be used to create different strategies or confirmations before buying or selling options. For example, if the net call premium is significantly higher than the net put premium, this may confirm a bullish trend. Alternatively, if the underlying price is rising but the net put premium is rising too, this may be a signal that traders are expecting a correction.