We have been working on SOA for more than a decade. The first “option mystery” occurred on October 15, 1996. Conrail was trading at a flat price, but thousands of calls were trading, far more than average volume and unexpectedly they were up, and up substantially. Very unusual. What’s going on? The answer came the next day as CSX Corp made a buyout offer for Conrail and the stock skyrocketed.

Following this episode, from time to time we came across similar situations where puts or calls acted out of sync with their underlying stock; and in an impressive percentage of the cases, the option direction correctly predicted what the stock would do and do soon.

Any trader would wonder: how many such things were going on? Wouldn’t a way to detect such activity have great value? Was anyone doing this? We searched through option data providers and option advisory services, but could not find any that offered such analysis.

In the ensuing years we had discussions with several option software programmers who assured us that formulas could be developed to detect such anomalies; but none of them came through. Eventually, after numerous attempts, we were able to construct the necessary formulas on our own.

Finally, we can proudly offer a service that is a genuine breakthrough. As a Lafferty client, you will receive email alerts, and analysis, when the system detects an anomaly.

For more information about SOA, call Dan Morgan at 800-221-8514; Or go to the Open An Account page.

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These option alerts are conducted by Jay Shartsis, Director of Option Trading at Lafferty & Co. The resulting Alerts Program is named Shartsis Option Alerts or SOA.