How to Use Barchart’s Unusual Options Activity Data to Trade These 2 Top Large-Cap Stocks

Barchart.com is rich with tools and information for investors wanting to gain an edge in the market. 

One excellent feature is the ability to easily screen for larger institutional options activity or the collective and forceful action of individual traders buying and selling calls and puts.

Having this access at one’s fingertips is a great way to gain stronger insight into stocks of interest, as well as locating exploitable opportunities. 

It doesn’t have to be difficult either.

A Simple and Effective Screener

To keep a pulse on the market, I begin with a basic stock screener which adds options volume (Options Vol). 

Importantly, the screen filters for 52-week average options activity (1Y Total Vol) of 5,000 contracts for a liquidity base line. 

Next, the put-to-call ratio (P/C Vol), IV/HV, IV Percentage, IV Rank and a 3-month average options volume percent change (3M Vol %Chg) are put in the screener, without any filter values, to provide a clearer and unbiased picture of what’s going on.

Lastly, I stick to heavily traded constituent companies in the S&P 500 ($SPX), Nasdaq 100 ($IUXX), and a curated watchlist of high volume, volatile theme names popular on the Robinhood (HOOD) brokerage and Reddit (RDDT) stock forums.

In general, this is a solid starting point. And as Tesla (TSLA) and Union Pacific (UNP) show, February’s final days were no exception for this simple screener to assist and provide powerful trading information. 

Tesla Stock’s Bullish Diagonal Spread

Tesla came up on Thursday’s scanner as a top stock for unusual options activity with a pair of 0% IV Rank and IV Percentile readings. 

The 0% rank level means that over the past year, market prices for TSLA options have never been cheaper in terms of the stock’s implied volatility. 

In tow, the 0% implied rank unsurprisingly confirms that at no other time in the past 52 weeks have Tesla’s implieds been lower. 

Coupled with implied pricing trading at a reasonable IV/HV ratio of 1.11 and shares in a trading range of about six months which engulfs both December 2024’s and November 2021’s all-time-highs, conditions could be ripe for a larger bullish move in TSLA shares. 

Tesla’s Options Flow page at Barchart.com shows one larger trader appears to be ready for a stock breakout and massively higher prices in the coming months. 

A substantial 3,610 diagonal spread priced for $6.10 went up early in Thursday’s session. A trader buying the December 2026 $600 call and selling the December 2027 $900 call receives the credit while taking in long deltas, positive gamma, and short vega.

Being short implied volatility may seem counterintuitive given the discussed ratios and relative pricing. 

But option prices routinely get pressured during bull markets. And if TSLA stock moves into a meaningful rally, sooner rather than later, the position’s combination of Greeks should work very favorably for this trader.

Readers can learn more about the Greeks here.

Union Pacific’s Dividend Capture Play 

Railroad stock Union Pacific is another top scanner stock that grabbed my attention this past Thursday. 

In this instance, abnormally heavy trading in UNP’s options pressured the put-to-call volume ratio to a 0.00 reading. 

Admittedly, shares of Union Pacific look poised for a larger rally after clearing a two-year congestion pattern in February. Still, are investors really that optimistic and buying call contracts like there’s no tomorrow? 

Further investigation using Barchart’s Options Flow page revealed the action wasn’t indicative of bulls hopping aboard Union Pacific with long call purchases. 

Nor was the lopsided options activity the result of more neutral call sellers.

The unusual options trading was the consequence of investors attempting to capture UNP stock’s dividend of $1.38 per share in front of Friday’s ex-dividend date. 

If successful, the “dividend play” trade in Union Pacific is as close to a free lunch on Wall Street as you’ll ever find.

One way to be involved in the dividend play and in UNP’s case, to collect a lucrative $138 per 100 shares, is through buy-writes manufactured from vertical call spreads. 

This is accomplished with the use of shorter duration, deep in-the-money calls which also maintain existing open interest.

The buy-write is similar to the covered call strategy. However, the ownership of stock and the sale of the call (for income) are transacted together rather than independently of one another. 

Above and from UNP’s Options Flow page, I’ve highlighted a 600 lot March 20’ $210 - $220 call spread priced for $10.00. 

Following the transaction, both the spread’s buyer and seller will exercise their respective long contract. 

The exercise will turn each long call into 100 UNP shares in time to collect the $138 quarterly dividend.

That’s not where the money is made though. The fact is shares of UNP lose the full $1.38 on Friday’s ex-dividend date. The position needs to be turned into a buy-write!

The hope, and where the potential free lunch comes from, is if the existing pool of open interest forget to exercise their long call contracts. 

If some percentage makes this mistake, the dividend play vertical trader, with a bit of luck from the Options Clearing Corp. lottery style assignment process, will remain short a deep call against the new (exercised call) long stock position. 

That’s the crux of this lucrative trade, the moment the buy-write position is confirmed.

The fact is the targeted calls that the investor remains short will go down in value by the price of the dividend without the obligation, unlike a trader short UNP stock, to pay shareholders. 

And in Union Pacific a winning dividend play amounts to owning a buy-write, which synthetically, is the same as selling a nearly worthless, same strike put for $1.38.

The Bottom Line

There’s a ton of options activity out there. But by taking advantage of Barchart’s scan and order flow tools, investors can learn what larger traders are really doing. Moreover, that knowledge can help uncover new spread ideas for personal profit down the road or maybe the next attractive-looking dividend event.