How to Find a Great Options Trade Idea
5-DAY OPTIONS TRAINING COURSE
Day 1
Education, Training, & Practice
Day 1: Education, Training, & Practice
To Do List:
A. Understand the Process
Over the next 5 days I will have you read the articles you can find on the Tools Menu Bar. So, you can jump ahead and read them for yourself or wait for my direction to make the learning process bite-size and manageable.
To start, it's very important that you understand where Options come into play in a Trade Idea Process.
It's also important to visualize HOW you win.
Read "Two Processes, Both Valid"
B. The Tools
Get acquainted with the different Tools. You can find a summary of each tool on the Tools Menu above, under "Tools Features" or simply click the links:
- Home - What are Today's Top Shark Trades?
- UOA - Where are the Sharks Active Today?
- Stock - What are the Sharks Doing in This Stock?
- NOC - How can I Find a Target Stock Price
- OI - Where are the Sharks Hiding?
- Watchlist - Where Can I Keep Track of the Flow?
C. Find your first options trades.
We are going to use the second process where we use the UOA and options flow as a signal to investigate further.
Below, I'll walk you through a simple process you can do on your own to start your hunt for great options trade ideas. While it may seem like a lot the first time you do it, I assure you that it gets easier each day.
Don't worry about finding the best trades right now. We'll get to that.
Focus on the process and the logic.
In general, for any stock, we want to figure out:
- What happened today?
- What happened in the past?
- How do they relate?
- What might it mean going forward?
Again, we will get to answer these questions over the course of the week.
Watch this video and find the step-by-step below:
Step-by-Step
Right now, let's quickly find a few interesting Top trades by starting on the Home Tools Page:
- Above the "Top Options Trade" data box, click on all 3 filters: "ATM & OTM Options," "No Spreads," and ">2 Weeks."
- On the "Results" dropdown near the top, click on 100.
- Double Click "Side" Column to sort by "Ask" or "AboveAsk." We want to focus on these trades labeled "Ask" or "AboveAsk"
- Start by looking for trades with > $1.00 premium
- Also, click on the black circles with the 'i' for guidance on the information provided.
Quickly review a few of these trades that you have isolated:
- Under the "Size" column, Click on the cell of one of these stocks and a pop-up will appear.
- Try to locate the options flow you see during the day. You may be able to see it visually on the "volume" histogram, or simply go to the bottom and sort by "Volume" to see the largest trades.
- If the trades were part of a "Spread," you will see volume in the "Spreads" column. Keep note of that.
- Get out of that pop-up and move to the "OI," or Open Interest, column. The relationship between Volume and OI will offer you clues (more on that another day). Click on the cell in the "OI" column to get detailed historical data on the Option.
- On that pop-up, get a sense of other historical volumes. Has this option been busy over the last week? Or was there big volume a couple of months ago?
See what else, if anything, is going on in the name:
- Once out of the OI pop-up, click on the stock ticker under the "Ticker" column.
- This leads you to the Stock page where you can see more options flow in that stock.
- Explore a bit here and notice that you can click on the black circles with the 'i' for more information on what's available and how to use.
Add an option from the New Options Chain to the Options Watchlist:
- Take note of the option you want to keep track of. We are now going to find it on the New Options Chain.
- From the Stock Page, click the "New Options Chain" on the top menu bar. You can also click any expiration date under the "Expiry" Column to get to the New options Chain.
- Once there, click on the Expiration date of the option on the left hand side of the screen.
- Look for the option and verify the volume on the New Options Chain.
- Click on the Watchlist box. Boxes should show up on the side of each option.
- Check the box of the option(s) you wish to choose.
- Uncheck the Watchlist box and a confirmation window appears.
- Review the option and confirm it by pressing 'OK."
- Go to the Watchlist Page off the top menu bar.
- See your option(s) in the Options Watchlist.
D. Practice
Repeat the above process two more times today in order to get 3 or more options on the Options Watchlist.
Finally, add the Tickers of the options to the Stock Watchlist at the top of the page by entering the symbol and pressing 'GO.'
Day 1
5-Day Options Training Course
How to Find a Great Options Trade Idea
Day 1: Education, Training, & Practice
To Do List:
A. Understand the Process
Over the next 5 days I will have you read the articles you can find on the Tools Menu Bar. So, you can jump ahead and read them for yourself or wait for my direction to make the learning process bite-size and manageable.
To start, it's very important that you understand where Options come into play in a Trade Idea Process.
It's also important to visualize HOW you win.
Read "Two Processes, Both Valid"
B. The Tools
Get acquainted with the different Tools. You can find a summary of each tool on the Tools Menu above, under "Tools Features" or simply click the links:
- Home - What are Today's Top Shark Trades?
- UOA - Where are the Sharks Active Today?
- Stock - What are the Sharks Doing in This Stock?
- NOC - How can I Find a Target Stock Price
- OI - Where are the Sharks Hiding?
- Watchlist - Where Can I Keep Track of the Flow?
C. Find your first options trades.
We are going to use the second process where we use the UOA and options flow as a signal to investigate further.
Below, I'll walk you through a simple process you can do on your own to start your hunt for great options trade ideas. While it may seem like a lot the first time you do it, I assure you that it gets easier each day.
Don't worry about finding the best trades right now. We'll get to that.
Focus on the process and the logic.
In general, for any stock, we want to figure out:
- What happened today?
- What happened in the past?
- How do they relate?
- What might it mean going forward?
Again, we will get to answer these questions over the course of the week.
Watch this video and find the step-by-step below:
Step-by-Step
Right now, let's quickly find a few interesting Top trades by starting on the Home Tools Page:
- Above the "Top Options Trade" data box, click on all 3 filters: "ATM & OTM Options," "No Spreads," and ">2 Weeks."
- On the "Results" dropdown near the top, click on 100.
- Double Click "Side" Column to sort by "Ask" or "AboveAsk." We want to focus on these trades labeled "Ask" or "AboveAsk"
- Start by looking for trades with > $1.00 premium
- Also, click on the black circles with the 'i' for guidance on the information provided.
Quickly review a few of these trades that you have isolated:
- Under the "Size" column, Click on the cell of one of these stocks and a pop-up will appear.
- Try to locate the options flow you see during the day. You may be able to see it visually on the "volume" histogram, or simply go to the bottom and sort by "Volume" to see the largest trades.
- If the trades were part of a "Spread," you will see volume in the "Spreads" column. Keep note of that.
- Get out of that pop-up and move to the "OI," or Open Interest, column. The relationship between Volume and OI will offer you clues (more on that another day). Click on the cell in the "OI" column to get detailed historical data on the Option.
- On that pop-up, get a sense of other historical volumes. Has this option been busy over the last week? Or was there big volume a couple of months ago?
See what else, if anything, is going on in the name:
- Once out of the OI pop-up, click on the stock ticker under the "Ticker" column.
- This leads you to the Stock page where you can see more options flow in that stock.
- Explore a bit here and notice that you can click on the black circles with the 'i' for more information on what's available and how to use.
Add an option from the New Options Chain to the Options Watchlist:
- Take note of the option you want to keep track of. We are now going to find it on the New Options Chain.
- From the Stock Page, click the "New Options Chain" on the top menu bar. You can also click any expiration date under the "Expiry" Column to get to the New options Chain.
- Once there, click on the Expiration date of the option on the left hand side of the screen.
- Look for the option and verify the volume on the New Options Chain.
- Click on the Watchlist box. Boxes should show up on the side of each option.
- Check the box of the option(s) you wish to choose.
- Uncheck the Watchlist box and a confirmation window appears.
- Review the option and confirm it by pressing 'OK."
- Go to the Watchlist Page off the top menu bar.
- See your option(s) in the Options Watchlist.
D. Practice
Repeat the above process two more times today in order to get 3 or more options on the Options Watchlist.
Finally, add the Tickers of the options to the Stock Watchlist at the top of the page by entering the symbol and pressing 'GO.'