How to Find a Great Options Trade Idea
5-DAY OPTIONS TRAINING COURSE
Day 3
A Stock You Like
Day 3: A Stock You Like
To Do List
A. Read these 2 articles:
- Finding Buyers - At the forefront of the UOA strategy is the belief that the Top 1% buy options to open a position only when they expect an outsized move in the stock. This means that we must be confident that the Options flow we follow are, in fact, Opening Buy transactions. This article explains how we gain confidence in that assessment.
- Volume vs. OI - The relationship between Volume and Open Interest is important. It offers us clues on whether the Options Flow is an opening or closing transaction. It also indicates that there may be more to the "options story" that we need to investigate using Historical data.
B. Analyze a Stock You Like
You can be receptive to the daily UOA or you can start with a stock that you know. By looking at the Open Interest page, you get a glimpse at where the Top 1% have already placed their bets (i.e. strikes and expirations). Click the cells to figure out when those trades occurred. Then, analyze those days using Historical data on the Stock Page to determine whether there are buyers hiding in those strikes. The main questions you should ask are:
- When did they trade?
- Were they buyers or sellers of that option?
- Were the options part of a spread?
Step-by-Step
Where's the Big flow?
- Go to the Open Interest Page
- Click on 1% and 5% to see what lights up
- Look for the biggest open interest
Analyze those Options?
- Click on the cell and a window pops up.
- Look at the volume history in that option. Notice any outliers?
- Hover the bars to get the dates of the big volume days. Write them down and head to the Stock page.
- Use the Calendar to see what happened on that day. Look for Buyers. If it's a spread, find the other leg.
- If there is high Open Interest, dig into that and see when that traded. This will lead you back to a previous date where you would simply repeat the analysis.
C. Repeat the Day 1 routine. (DAY 1)
Keep adding to your Options Watchlist.
Also, add the same tickers to the Stock Watchlist.
With the Stock Watchlist, you can use the dropdown on the Home Page to isolate the Options Flow to specific names. By adding the stocks from your Options Watchlist, you'll be able to see if activity picks up in those names. Seeing repeated Options Flow in the same direction can give you further confidence in your assessment of the situation.
Day 3
5-Day Options Training Course
How to Find a Great Options Trade Idea
Day 3: A Stock You Like
To Do List
A. Read these 2 articles:
- Finding Buyers - At the forefront of the UOA strategy is the belief that the Top 1% buy options to open a position only when they expect an outsized move in the stock. This means that we must be confident that the Options flow we follow are, in fact, Opening Buy transactions. This article explains how we gain confidence in that assessment.
- Volume vs. OI - The relationship between Volume and Open Interest is important. It offers us clues on whether the Options Flow is an opening or closing transaction. It also indicates that there may be more to the "options story" that we need to investigate using Historical data.
B. Analyze a Stock You Like
You can be receptive to the daily UOA or you can start with a stock that you know.
By looking at the Open Interest page, you get a glimpse at where the Top 1% have already placed their bets (i.e. strikes and expirations).
Click the cells to figure out when those trades occurred.
Then, analyze those days using Historical data on the Stock Page to determine whether there are buyers hiding in those strikes.
The main questions you should ask are:
- When did they trade?
- Were they buyers or sellers of that option?
- Were the options part of a spread?
Step-by-Step
Where's the Big flow?
- Go to the Open Interest Page
- Click on 1% and 5% to see what lights up
- Look for the biggest open interest
Analyze those Options?
- Click on the cell and a window pops up.
- Look at the volume history in that option. Notice any outliers?
- Hover the bars to get the dates of the big volume days. Write them down and head to the Stock page.
- Use the Calendar to see what happened on that day. Look for Buyers. If it's a spread, find the other leg.
- If there is high Open Interest, dig into that and see when that traded. This will lead you back to a previous date where you would simply repeat the analysis.
C. Repeat the Day 1 routine. (DAY 1)
Keep adding to your Options Watchlist.
Also, add the same tickers to the Stock Watchlist.
With the Stock Watchlist, you can use the dropdown on the Home Page to isolate the Options Flow to specific names.
By adding the stocks from your Options Watchlist, you'll be able to see if activity picks up in those names.
Seeing repeated Options Flow in the same direction can give you further confidence in your assessment of the situation.