Without doubt - volume is much higher than normal. That's to be expected. Stock must be traded to meet the demands of options holders who are in the money. Abnormally high amounts of stocks will be traded. The question is: who are the people doing the trading?
Now it gets complicated. Arbitragers dominate trading in futures and options. They buy/sell huge volumes of index futures and options in underlying index stocks, taking advantage of small inefficiences in prices between the two sets of derivatives. On Options Expiry Day, stock must be bought/sold to meet the requirements of the futures and options that they hold.
Note these people are not the "Smart Money" referred to by the VSA theory. They are people making money out of small inefficiencies in the prices of futures (on indices) and prices of options (on underlying stocks in the indices). They are the people dominating orders being placed with the stock exchange specialists on Options Expiry Day. A balancing act is then played out - usually well known in advance - because the options/futures have been bought/sold well in advance.
Occasionally, a large stock order will be placed - but nobody is willing to take the other side - resulting occasionally in volatility in a particular stock. But usually the requirements for options expiry day are known in advance - so those swings in volatility are not common.
You can get distinct movements in stocks before and after options expiry day - caused by the usual speculative activity in the stock market.
But Options Expiry Day tends to follow a particular pattern. Usually - Options Expiry Day has a narrow range in the body of the candle. Occasionally you will get long upper or lower candles - caused by volatile action in stocks where nobody is willing to take the other side of a trade. Eventually somebody will - and the volatility subsides. And the long upper or lower shadow will be seen.
What's the point of all this? Simple really. Options Expiry Day is governed by the actions of arbitragers and stock exchange specialists matching out the options and futures coming due on that day. That's the volume that you are seeing. It's not governed by the "smart money" taking a position - entering with supply or demand on that day. Options Expiry Day is atypically dominated by the actions of arbitragers and stock exchange specialists matching up their requirements because of options expiry.
This is why I have repeatedly said, bracket options expiry day. It has little to do with the usual speculative activity (smart money) going on every other day of the month. It is simply a day when arbitragers and stock exchange specialists do their business. That day has little to do with the usual speculative activity of "smart money" operators.
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