Use Block Volumes & Decorated Trades to Detect Large Block Trade Opportunity

Block volumes and decorated trades data offer powerful insights into institutional activity and whale participation in the options market. These endpoints provide information on large block trades and enriched metadata that may signal significant big-money moves. By tracking supply-demand imbalances and analyzing order flow, traders can gain a clearer view of market dynamics and adjust their strategies accordingly.

Amberdata provides dedicated endpoints for both Block Volumes and Decorated Trades. The Block Volumes endpoint returns the total traded options volume for a selected exchange and underlying currency (default settings are Deribit and BTC). The Decorated Trades endpoint enriches trade data with pre-trade and post-trade level-1 orderbook information.

Below, we explain how to use these endpoints to uncover institutional footprints. We discuss the process of analyzing block volumes, explore the benefits of enriched metadata in decorated trades, and explain how combining these insights can reveal coordinated big-money moves. This analysis ultimately enhances market understanding and risk management.

Analyzing Block Volumes

Endpoint Overview

The Block Volumes endpoint delivers the total options volume traded in large blocks for a chosen exchange and underlying asset. Data is organized by instrument and includes information from third-party block trade venues such as Paradigm and GreeksLive. The default configuration typically focuses on Deribit and BTC, but the parameters can be adjusted to suit other assets and exchanges.

Key Considerations

• Large block trades often indicate institutional interest or whale activity. A sudden surge in block volume can suggest that a significant liquidity injection is underway.
• By monitoring block volumes, traders can assess periods when large trades might impact short term price movements. High concentration of volume in specific instruments may signal supply-demand imbalances.
• The data allows users to track not only the overall volume but also the distribution of volume across various trading venues. This information is useful for evaluating which market segments are attracting the most attention from big players.
  

Understanding the flow of block trades provides a foundational view of institutional participation. Consistent increases in block volumes can signal that major market participants are positioning themselves ahead of important moves.

Leveraging Decorated Trades for Enhanced Market Insights

Endpoint Overview

The Decorated Trades endpoint offers detailed trade data that is enriched with additional metadata. It includes option trade times and sales data along with pre-trade level-1 orderbook snapshots and post-trade level-1 details. This enriched data helps distinguish between active and passive participants and sheds light on the aggressor behind each trade.

• Extra metadata, such as information on multi-leg strategies, provides deeper insights into complex institutional moves. This additional layer of detail is critical for understanding the full context of a trade.
• Decorated Trades data can reveal the directional bias of large market participants, provide information on Gamma Exposure, and offer insights into emerging volatility trends. This insight is essential for assessing how institutional actions may affect market dynamics.
• The enriched trade data assists traders in identifying whether significant trades are part of a coordinated, big-money strategy. Recognizing such patterns enables traders to anticipate future market shifts and adjust their positions accordingly.

By evaluating decorated trades, market participants gain a nuanced view of order flow, trade
aggressiveness, and the potential impact on Greeks. This information helps differentiate between routine trading activity and moves that suggest a strategic rebalancing by institutional investors.

Integrating Block Volumes and Decorated Trades Data

Usage Framework

Combining block volumes with decorated trades data offers a comprehensive approach to detecting institutional footprints. When traders compare periods of high block volume with the enriched details provided by decorated trades, they can confirm the presence of significant, coordinated moves.

Key Insights

• A spike in block volumes accompanied by detailed trade metadata may point to a coordinated institutional effort. When large volumes are concentrated in specific instruments and the corresponding decorated trades reveal aggressive market participation, this is a strong signal of big-money activity.
• Analyzing both endpoints together helps traders detect supply-demand imbalances more accurately (and infer changes in volatility surfaces). For example, if block volumes surge at a key strike and the decorated trades data shows that the majority of those trades were executed by active participants, this may indicate that institutions are taking advantage of a temporary liquidity imbalance.
• This integrated approach supports timely adjustments to trading strategies. By understanding both the size of the trades and the nature of the trade execution, traders can better assess the potential short-term price impact and adjust their positions to mitigate risk.

The combined insights from block volumes and decorated trades enable traders to construct a more informed picture of market activity. Recognizing these institutional footprints early can lead to improved risk management and a more proactive trading approach.

How to Use This

Monitoring block volumes and analyzing decorated trades provide critical insights into institutional activity in the options market. The Block Volumes endpoint reveals significant liquidity injections by highlighting large block trades across key exchanges and instruments. The Decorated Trades endpoint enriches this picture by offering detailed trade metadata that clarifies the true aggressor behind each transaction.

By comparing high block volumes with the enriched details from decorated trades, traders can detect supply-demand imbalances, coordinated moves by institutional players, and shifts in market sentiment.

This data-driven approach enhances market analysis and supports more effective strategy adjustments. For additional technical guidance, please refer to the Block Volumes documentation and the Decorated Trades documentation provided by Amberdata.

Incorporating insights from both block volumes and decorated trades into your market analysis
toolkit can help you better navigate periods of heightened institutional activity and make more informed trading decisions.