A hands-on options curriculum covering real trading concepts. Read the lessons, work through examples, and test your knowledge.
OVERALL ACADEMY PROGRESS
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Key terms in this lesson
Lesson 4: 3.3: Order Flow Imbalance (OFI) & Price Discovery
Analyze how inequalities between buying and selling volumes shift order book states and dictate price changes.
1. Quantifying Order Flow Imbalance
Order Flow Imbalance (OFI) measures the net flow of aggressive market orders relative to limit changes. If aggressive buying volume heavily outweighs selling volume, the best ask is depleted and price is forced to tick upward.
Conversely, heavy aggressive selling depletes the best bid, forcing price downward. Real-time discovery is driven by this constant friction between eager takers and patient makers.
★ Key Metric: High net positive OFI is historically correlated with immediate, positive short-term price moves.
Click to enlargeOptions Structure Exploration
Options are contracts cleared in the bid-ask auction market. Interact with the Order Book below to understand how buy offers (bids) and sell offers (asks) intersect, and inspect the structural breakdown between Call and Put contracts.
Limit Order Book & Spread Interface
Hover over ASK or BID to dissect the auction market dynamics.
Right to Buy
- Outlook: Bullish (Goes up)
- Risk: Capped to premium paid
- Profit: Scales as stock surges
Right to Sell
- Outlook: Bearish (Goes down)
- Risk: Capped to premium paid
- Profit: Scales as stock falls
KNOWLEDGE RECONNAISSANCE
What causes a price to move upward in an order book?
More lessons in this module
- 3.0: Limit Order Books and Bid-Ask Spreads
- 3.1: Understanding Market Depth & Level II Data
- 3.2: Market Impact and Slippage Mechanics
- 3.4: Adverse Selection & Toxic Order Flow (VPIN)
- 3.5: Market Making Mechanics and Inventory Risk
- 3.6: Dark Pools and Block Trading Execution
- 3.7: High-Frequency Trading (HFT) and Microstructure
- 3.8: Limit Order Book Modeling & Queue Position
Signal Desk is where you practice this on real stocks: real option chains (about 15 minutes delayed), the Trade Check and a paper-trading account that risks no real money. Join to add it, your progress tracking and PDF downloads.