Option Volume

Option volume refers to the total number of option contracts traded within a specific time period, such as a day or an hour. It is a measure of market activity and liquidity for a particular option series.

Unlike open interest, which counts the total number of active contracts, volume measures the intensity of trading activity. High volume indicates strong interest and can signal the start or continuation of a price trend.

Conversely, low volume may suggest a lack of conviction or interest in the current price levels. Traders analyze volume to confirm the validity of technical patterns and to assess the participation level of different market segments.

When combined with price changes, volume data provides a powerful tool for gauging market sentiment and predicting potential reversals. It is a fundamental metric for any active trader in the derivatives space.