Volume Spikes can be Profitable....


Junior member
Some call it "leaks" while others just say "someone knew", either way they are talking about the same thing. A volume spike with no printed news on a stock, and that stock finally makes a big move 2 to 10 days later ( see your special report on Finding Winners ). We see it all the time. A stock that normally trades 185 thousand shares a day trades over 500K one day. A scan of the headlines shows no news releases and they didn't have earnings reports. Then sure enough 5 days later they announce a new contract, or a big market gain or something.

This is detective work, but it's certainly worth looking at. If you find a stock that is trading twice it's normal daily average volume and that stock has no news associated with it, somebody has spilled the beans, either there is a rumor running around or a network of insiders have leaked that news and the news spread.

There are many stock sites that list unusual activity. Every once in a while take a look at some of the high volume surges and then look for news on the stock. Most times you will find something on Reuters, or Dow Jones or PR Newsire. But if you hunt and don't find a single item that would cause such a move, there is a good chance that picking up a couple cheap call options on that stock makes sense. Sure it may not work out, sometimes it doesn't, especially rumor volume. But quite often you will be rewarded for your diligence.

This also works for puts too. If the high volume day with no news sent the stock down instead of up, you can almost bet bad news is on the way, you just don't know when. A small out of the money put will generally reward you in times like that.
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