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I’ve been getting a lot of questions about how large options orders create those quick, explosive moves in stocks.
So today we’ll discuss the mechanics — not the theory, the actual risk management requirements that force market makers to act.
This isn’t about predicting where a stock will go.
It’s about understanding what has to happen the moment a massive options order hits the tape.
The Math That Forces the Buy
Each option contract represents 100 shares of stock.
So when someone buys 10,000 call options at a $100 strike price, the market maker selling those options becomes liable for 1 million shares — that’s $100 million worth of stock.
If the stock closes at $105 and they owe 1 million shares at $100 but have to buy at $105, they lose $5 million.
At $110, they lose $10 million. At $120, they lose $20 million.
That’s why when you see those massive 25,000 contract orders hit, you have to remember those aren’t random retail traders pushing that much size.
The vast majority are buys from smart money and hedge funds loading up.
And when the bulk is bought, the market maker is instantly on the hook.
They have no choice. They must start buying shares immediately while they’re still cheap — sometimes hundreds of thousands of shares at a time — which artificially pushes the stock higher.
That artificial push is our opportunity.
Real Examples That Show the Forced Buying
I don’t wait around to see if the stock eventually reaches the strike price. That’s not the play.
All that matters is the moment that large options position hits, the market maker is forced to start buying shares, which drives the price higher and gives us a free ride.
When my Free Ride Scanner flagged 61,369 call options at the $192.50 strike on Nvidia (NVDA), market makers faced potential losses in the millions if the stock popped above that level.
So they had to buy shares by the truckload while prices were still relatively cheap, and that forced buying delivered a 111% return.
At 10:51 a.m. one day recently, two large options orders hit Unity Software (U) simultaneously — 8,664 contracts at the $37 strike.
Same setup: If the stock popped above $37, the market makers could instantly lose millions if they didn’t start offsetting risk early.
That hedging activity pushed the stock higher and paid out 21.9% in just under three hours.
And this pattern isn’t limited to the big tech names.
Take my trade on Kohl’s (KSS) in October. If KSS wasn’t on your radar then, I wouldn’t blame you. Nobody was watching it, same with Macy’s (M).
These weren’t tickers anyone thought were worth their time — until the massive options activity hit.
That one was worth it, and the setup played out the same way because the mechanics never change.
The key is understanding what must happen — not what might happen.
After GameStop’s (GME) meme stock explosion in 2020, risk requirements at market maker firms became tight and all internal. That means firms have to act fast to avoid getting caught unable to hedge out of trouble.
When you see the large order hit and you understand the forced mechanics behind it, you’re not guessing.
You’re riding the wave they have to create.
We walk through live examples and actionable setups like this every day:
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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.
PS. 4 of the Mag 7 Release Earnings on Fed Week!
Now THIS is what I mean when I said we were in the heat of earnings season…
We’ve got a full calendar with four of the Magnificent Seven stocks releasing earnings this week.
PLUS, it’s also Fed Week, and Fed Chair Jerome Powell and the committee will make their decision on rates.
And as expected, the markets are getting choppy, price moves are getting faster, and a lot of stocks are starting to buckle.
But not every stock falls apart when things get messy.
Some actually do better. The same pressure that crushes weak stocks ends up pushing a few others higher.
Those are the stocks I care about, and they’re the reason I built Wave Software.
Every trading day, it reaches into the market to isolate stocks that are showing the right structure, momentum, and timing to move aggressively.
It’s a disciplined process designed to resist even unstable environments.
Over the past year, this approach has delivered an 81.6% overall win rate, and since last October, every signal has closed in the green.
I’m not making absolute guarantees on the market…
But if you’d like to look at what signal is already going off right now…
I’ve Got the Details Right Here
DISCLAIMER: We develop tools and strategies to the best of our ability, but no one can guarantee the future. There is always a risk of loss when trading. Past performance is not indicative of future results. The performances displayed here are some of the best examples from the public trade research service that utilizes this underlying method. From 1/1/25 through 1/12/25, the win rate was 81.6% with a 43% average winner and a 16% average net return of winners and losers 5-day average hold time.
