Following the Crowd: Beginners Investors Guide to the Options Market

Authors

Jeremy Dawkins, Southern Methodist UniversityFollow
Alexy Morris, Southern Methodist UniversityFollow
Jacob Gipson, Southern Methodist UniversityFollow
Masoud Valizadeh, Northern Illinois UniversityFollow

Abstract

While the options market may be intimidating for a beginner, having the right tools can help improve the outcome of their investments. This project aims to develop a tool that uses time-series analysis and forecasting to model the future demand of S&P 500 and AAPL options contracts. The open interest of these contracts will be analyzed using various models such as AR, ARIMA, Neural Networks, and VAR, along with the put-call ratio. The goal is not to make buy or sell recommendations, but alert the user when money is flowing into a security or index. Of all the models, the use of the ARMA model provides the best results for predicting the open interest in contracts for these specific symbols.

Recommended Citation

Dawkins, Jeremy; Morris, Alexy; Gipson, Jacob; and Valizadeh, Masoud (2023) "Following the Crowd: Beginners Investors Guide to the Options Market," SMU Data Science Review: Vol. 7: No. 1, Article 7.
Available at: https://scholar.smu.edu/datasciencereview/vol7/iss1/7

Creative Commons License

This work is licensed under a Creative Commons Attribution-Noncommercial 4.0 License