US Option analysis

[tonygamble]

Roger will recognise me from another forum where I am being encouraged to start trading some LIFFE options.

Having decided a year ago that trading US, rather than UK, stocks in my CFD I am anxious to do likewise with US equity options. As with straight equities I feel that that considerably greater volume of business in the US makes for a more controlled market.

I have been attracted by the TradeStation software called OptionStation where you pick an underlying equity and an option trading strategy and the software evaluates spreads available and ranks them. However, this requires one to be a TradeStation client.

I have now found three web based alternatives and I wonder if anyone around here has tried any of them. They are

http://option-wizard.com/scan/manual.shtml
http://www.optionetics.com/
http://www.voptions.com/index.htm

My instinct is to go for the first in the list.

Any views folks. Or, if not, any views as to where I can get some UK based views.

Tony

 

[tonygamble]

78 views and not one comment.

The route I have taken is to subcribe to www.IVolatilty.com.

There you can test any strategy against any basket of US equity options and it will find you any that fit your paramaters and rank them in whichever way you want. I have been using the system for a week and it is brilliant.

I am told you can add LIFFE but I'd never want to trade UK options so I have to admit I have not tried their software on the UK data.

You can free trial any aspect of the system for two weeks. They have a very attentive e:mail support system.

100% recommendation from here.

Tony

 

[Strategic Trader]

options trading is only for professionals - simply because the spread on a US stock can be one cent - but on the underlying US option it is going to be 5c on an opton up to $3 and 10c over that - and that is a lot of spread as a percentage of cost to overcome

in your coment about that site - you said "it is brilliant" - what do you mean by that? and do you have the experience and skill to know if the site is good or not? regardless - in your use of their tools - dont forget to calculate the spread - otherwise it will cost you big bucks with options

 

[tonygamble]

In the US there are hundreds of stocks, maybe thousands, where you can trade options. In the UK LIFFE only lists about seventy and of these only about a dozen are traded enough to make a useable market.

In the US options have monthly expiry dates. In the UK most are quarterly.

My experience of trading spreads in the US is that you can usually trade the prices in the middle of the spreads.

Trading spreads can be structured to be a far lower risk than trading the underlying.

I said the site was brilliant in the hope that someone might invest a few minutes of their time looking at it and maybe testing one, or more, of the facilities on their free trial system.

Do I have the experience and skill to know if a site is good or not. I have traded stocks, CFD's and now options, using Synergy Star Platinum and now Updata since 1996.

Calculating the spread is something I am hardly likely to forget. But thanks for the reminder.

Tony

 

[Strategic Trader]

what do you mean by trading spreads? especially in relation to offering lower risk than the underlying - since options are directly priced from the underlying price and liquidity?

there is a minimum of 5c or 10c spread on US options dependent on the option price - liquid options will tend toward these amounts - but less liquid options and/or when there is a lack of liquidity in the underlying causes spreads to go out on the options - so although in these situations it may be possible to deal within the spread - it just means that you would be trading at what would be the normal price for the option

 

[tonygamble]

Trading spreads?

The situation where one's maximum downside risk is quantified. The risk of buying the underlying is also quantified - but it is the risk of losing the whole investment.

I am not going to argue with either the merits, or otherwise, of trading options. This argument belongs to another thread.

I am not going to dispute, or otherwise, your views about US options.

I started this thread to try and get some feedback on TA specific to US options. Six weeks and seventy odd views later not one person came up with an idea.

So out of respect for those who might ask the same question in the future I posted my findings. That is the topic of this thread as far as I am concerned. If anyone wants to tell me that there is a better service available I'll listen to them.

In the meantime I'm withdrawing from this discussion.

Tony

 

[JRich]

What's up tonygamble... give me some time to try 3 sites u have listed in your 1st posting & I'll get back 2 u... I agree with you that options trading isn't as risky as most people think... right now I attend every (free) seminar/class on options just 2 get different perspectives & ideas from people... also, I'm considering subscribing to a newsletter that focuses on options... from my understanding they 1st evaluate the stocks & then applied that data to the bid/ask price, strike price & expiration date... I'm with u on this... hopefully, we can figure this thing out together... I'll be in touch

Trading spreads?

The situation where one's maximum downside risk is quantified. The risk of buying the underlying is also quantified - but it is the risk of losing the whole investment.

I am not going to argue with either the merits, or otherwise, of trading options. This argument belongs to another thread.

I am not going to dispute, or otherwise, your views about US options.

I started this thread to try and get some feedback on TA specific to US options. Six weeks and seventy odd views later not one person came up with an idea.

So out of respect for those who might ask the same question in the future I posted my findings. That is the topic of this thread as far as I am concerned. If anyone wants to tell me that there is a better service available I'll listen to them.

In the meantime I'm withdrawing from this discussion.

Tony

 

[tonygamble]

JRich,

As you know I was in S America when your first post came up.

I'm back in the UK now.

IVolatility still meets my needs - though I saw the US market increase my profits by 50% in the two weeks I was away and then kill all the gain in two days. Oh, the joys of futures!

I am not sure what you expect from IVolatility by way of back testing.

I make my choice of SP500 to trade using Updata and then use IVolatility on my short list to suggest suitable spreads, naked puts, etc.

If you want to bounce off any ideas do come back to me. As I was forced to say earlier I am not interested in arguing the merits of option trading in this thread - but as ways of working with IVolatility I am happy to discuss anything.

My advise is that you should not expect miracles from their data or software. It is for you to decide whether you are bullish, bearish or unexpecting any move. IVolatilty will then offer you any options that meet your profitability criteria.

Stay in touch.

Tony
London UK

 

[optionator]

Credit Spread trading example

A site I use to evaluate my spread trades is Options-R-EZ which provides free options calculators for analyzing a variety of options trades. It allows you to assess your probability of success and profit expectancy for Vertical Spreads, Condors, Straddles, etc. I use this to determine which trades have a better chance of succeeding. It also determines what max loss you can except to still provide a positive expectancy.

The URL is http://www.optionsrez.com

JRich,

As you know I was in S America when your first post came up.

I'm back in the UK now.

IVolatility still meets my needs - though I saw the US market increase my profits by 50% in the two weeks I was away and then kill all the gain in two days. Oh, the joys of futures!

I am not sure what you expect from IVolatility by way of back testing.

I make my choice of SP500 to trade using Updata and then use IVolatility on my short list to suggest suitable spreads, naked puts, etc.

If you want to bounce off any ideas do come back to me. As I was forced to say earlier I am not interested in arguing the merits of option trading in this thread - but as ways of working with IVolatility I am happy to discuss anything.

My advise is that you should not expect miracles from their data or software. It is for you to decide whether you are bullish, bearish or unexpecting any move. IVolatilty will then offer you any options that meet your profitability criteria.

Stay in touch.

Tony
London UK