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 Gold Customer
Joined: 12/7/2004
Posts: 43
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I'm a disabled guy that enjoys using TC. I like BASIC option trading. What I want to do is: a) find stock or index plays that has a better than 75% chance of moving up or down one point or more in a week. b) Spend less than a hour doing part a.
I'm willing to upload my chart templates, so you can see what I use (like TSV with MA).
Note, I do know about the EasyScan "Optionable Stocks with Volume Surge." Volatility is nice, but if it is low it is ok.
Is the above possible? If so, how?
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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This moves into the realm of investment advice. A place where Trainers cannot tread. I will move this to the Market Talk Forum so other users can offer their thoughts.
- Craig
Here to Help!
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Registered User
Joined: 12/19/2004
Posts: 457
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As someone who trades options, I'd say if you are only looking to buy puts or calls, use TC2005 to search for stocks that look strong/weak technically and/or fundamentally, then buy an in the money option. I would personally buy longer term (ie. 3+ months), as I trade the longer trends. But for a swing trade, you could use a closer contract (ie 2 months or less).
In the money options are more highly correlated with the stock than at the money or out of the money options. You have a better chance of making money if your analysis is correct, and you still have some leverage.
Of course, you should have an option model calculator to tell you if an option is over or underpriced. Even if you plan on buying ITM puts or calls, then a calculator is a must.
I think the Options council produces one that you can get for free, that provides risk graphs and all. Of course, you have to type in the data in order to get any output.
As for setups, I'd check for stocks with the highest/lowest % gain for 3 months, and a nice looking trend (eg. check out BDY for a good downtrend.)
To find that, I search for a Rate of Change of a moving average using a PCF:
(AVGC50 / AVGC50.25 ) * 100
This shows you the direction of the 50 day moving average. Numbers above 105 are bullish, below 95 are bearish, and in between are neutral.
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Gold Customer
Joined: 12/7/2004
Posts: 43
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QUOTE (rmr1976) As someone who trades options, I'd say if you are only looking to buy puts or calls, use TC2005 to search for stocks that look strong/weak technically and/or fundamentally, then buy an in the money option. I would personally buy longer term (ie. 3+ months), as I trade the longer trends. But for a swing trade, you could use a closer contract (ie 2 months or less).
In the money options are more highly correlated with the stock than at the money or out of the money options. You have a better chance of making money if your analysis is correct, and you still have some leverage.
Of course, you should have an option model calculator to tell you if an option is over or underpriced. Even if you plan on buying ITM puts or calls, then a calculator is a must.
I think the Options council produces one that you can get for free, that provides risk graphs and all. Of course, you have to type in the data in order to get any output.
As for setups, I'd check for stocks with the highest/lowest % gain for 3 months, and a nice looking trend (eg. check out BDY for a good downtrend.)
To find that, I search for a Rate of Change of a moving average using a PCF:
(AVGC50 / AVGC50.25 ) * 100
This shows you the direction of the 50 day moving average. Numbers above 105 are bullish, below 95 are bearish, and in between are neutral.
One more question, what other sorts, PCFs or EasyScans do you use?
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Registered User
Joined: 3/14/2005
Posts: 64
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I personally don't trade options but I wrote a tc scan for a guy that does, and well he has been quite successful at it.
He calls it his inside outside upside close
The Theory goes like this:
If todays trading range on an individual stock goes higher than yesterdays high and lower than yesterdays low and closes higher than yesterdays high, then the stock is about to make a move to the upside. If the close is lower than yesterdays low then it signals a move to the down side.
He uses this to make selections when they aren't apparent to anyone else at that time and goes through a lot of trades before one hits big. Most of his trades are closed out quickly to maintain a near net zero in losses, but when he hits it right, wow.
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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Here is the PCF for this:
QUOTEIf todays trading range on an individual stock goes higher than yesterdays high and lower than yesterdays low and closes higher than yesterdays high, then the stock is about to make a move to the upside. If the close is lower than yesterdays low then it signals a move to the down side.
(H>H1) AND (L<L1)
This will find the stocks with a range today enhulfing yesterday. You can sort the list by Price Percent Change Today to find the ones taht closed higher or lower.
- Craig
Here to Help!
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Registered User
Joined: 1/19/2005
Posts: 2
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Craig
What would the formula be for this engulfing PCF for a weekly chart?
Thanks
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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(MAXH5>MAXH5.5) AND (MINL5<MINL5.5)
- Craig
Here to Help!
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Registered User
Joined: 3/9/2005
Posts: 71
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Look at the energy sector and sort by "latest split date". Expand your window to about 12 - 14 months wide daily increment. Scan down the list to where you you see splits with a few months gone by like maybe starting in Feb or March split date. Notice the majority of them (not all) as time evolved have moved, typically in the double digit range. If you take in consideration the ratio split, it is easy too quickly get some hope to the potential this thing can and usually creates. This move is usually within 3 months for the most part. So, with this event taking place, would your options move too? HHMMM. I have noticed that a focal point about 2 - 3 weeks before the split seems to help capture a wilder price swing movement. Would a delta neutral straddle option play possibly work on this event?? The REIT stocks (be selective) seem to do ok in this current time frame too. Never use real money until you have enough data to be confident. Don't forget earnings reports cause swings too. To be able to realize results on a weekly basis will require seed planting now and when time grinds on, things will show up often...
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Registered User
Joined: 3/19/2005
Posts: 47
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When trading options, you're usually looking for leverage. The higher the price, the more leverage you have, and also the greater the risk, but still limited to the amount you invest if you are long in your option. I tend to look for the higher priced stock. If a $100 stock makes a 1% move, that's $1 and an in the money option will move approximately $1. If a $10 stock moves a 1% move, that's only 10 cents and the the in the money option will also move about 10 cents. The option on the higher priced stock will be more expensive, but not proportionally more, so you get a much greater return on your money. I agree with robwiley, do it on paper until you are confident, and only use a small portion of your investment capital. There are some online brokers who allow you to paper trade formally which really helps keep you honest. You have to place a virtual trade, and watch it's performance. You can't fool yourself by saying "I would have sold there.", you actually place virtual trades based on current market performance. If you are really serious, there are systems which will allow you to backtest your trading system too.
Stephen Smith
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