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One question I get more than almost any other: How do you know if the big money is still in a trade?

You see a huge options order on the scanner. You enter the position. Then the stock starts bleeding. Down 10%. Then 15%. Then 20%. And you’re sitting there wondering: Did the institutions that triggered this whole thing already bail out while I’m left holding the bag?

There’s a simple way to check — and it’s saved me more times than I can count.

The Open Interest Trick

When you’re in a position based on big options flow and you’re not sure whether to hold or fold, pull up the options chain for your contract. Look at open interest.

Open interest shows you all the contracts that were opened and are still being held. If you saw thousands of contracts hit the scanner yesterday and that same size is still sitting in open interest today, that means those traders didn’t close. They’re still in.

If you ever want to take it a step further, Thinkorswim lets you add open interest directly onto your chart. It’s a simple study — just search for “open interest,” add it and you’ll see it plotted day over day.

That lets you track whether the position institutions opened is holding steady, rising or falling without digging through the chain each morning.

Alongside that, it doesn’t hurt to glance at volume. When the volume lining up with the contracts looks strong — when you can literally see that strength coming in — that gives you extra confirmation the move has conviction behind it.

I used this recently on Enphase Energy (ENPH). We were down 20% on the position, and I wanted to know if I should cut it. So I checked the chain.

Not only were all those contracts from the big flow still sitting there, but even more volume was coming in — and there were no puts being bought.

Despite the drawdown, smart money was still bullish. That’s when I decided to hold.

Now, if I’d pulled up that chain and seen that 15,000 contracts opened on Tuesday, but only 200 remained Wednesday, that would tell me everybody cashed out. They decided they were done.

That’s your signal to move on. When open interest collapses like that, you’re not staying in with institutions — you’re staying in alone.

Why NU Was the Perfect Example

This is exactly how I handled NU Holdings (NU) — the Brazilian banking stock. This one was brutal. We were down 60% at one point. Sixty percent.

Most traders would’ve bailed instantly. But every single day I checked, open interest never budged. Not a single meaningful change. That told me the same big traders who initiated the move were still hanging on.

So I held too. And eventually that massive drawdown flipped into a 17% winner. Not because I’m fearless, but because I’m disciplined enough to trust data when it’s telling me something clear.

I know it’s tempting to set hard stop losses and move on when a position hurts. But sometimes the smart move is to hold — especially when you can see that the same institutions who got in before you are still sitting in the exact same spot, waiting for the same move you are.

Open interest gives you transparency. It shows you what the big money is actually doing, not what you’re guessing they might be doing.

And when you combine that with volume and price action, you get a clear window into whether the people who started the move are still committed to seeing it play out.

To better trading,

Alex Reid
WealthPin

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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. 

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Disclaimer: We develop tools and strategies to the best of our ability, but no one can guarantee the future. All performance results are from the Alex Reid private testing, where the strategy had a 76% overall win rate and an average return, winners and losers included, of 29.5%, with an average winner return of 48% and an average hold time of 1 day.