General Options Trading Questions
1) How many positions should be open simultaneously?
2) What is the difference between writing an option and selling an option?
3) When is it o.k. to hold options into the last 30 days before expiry?
1) How many positions should be open simultaneously?
Some say you shouldn’t have more than six to eight positions open simultaneously because they become too difficult to manage properly. On the other hand, I usually try to take at least three or four simultaneous positions in any campaign. I expect one in four trades to fail, so with three or four positions I would expect two or three to be successful. If I only took one position I would put too much psychological pressure on myself for the single trade to be successful because I would have all my eggs in the one basket. By always taking at least three or four positions I spread the risk, and don’t have as much pressure on myself to make any single trade successful.
2) What is the difference between writing an option and selling an option?
Please click on the image below to view a recording (about 2 minutes) of our answer.
3) When is it o.k. to hold options into the last 30 days before expiry?
This question was asked by one of our Auto-Trade clients, and the answer is available as a recording of about 5 minutes in length. To view this recording please click in the image below.
Questions about OptionVue
Still have a few questions before trying the software? Here are answers to some frequently asked questions about OptionVue 6.
1) How can I make money with OptionVue 6?
2) What is it like to trade using OptionVue 6?
3) Can OptionVue 6 be customized to show the information I want?
4) Will the program simplify account management and tax reporting?
5) Can I see volatility information in OptionVue 6?
6) Can I locate trading opportunities based on my specific criteria?
7) Why use OptionVue 6 vs. any other options analysis program?
1) How can I make money with OptionVue 6?
OptionVue 6 can find the ‘perfect’ option strategy for you, maximizing your profits while minimizing risk. The Trade Finder scans for the optimal option trade for you automatically by running thousands of simulations to find the position which performs the best in your projected scenario.
Options sometimes become mispriced, presenting you with a trading opportunity. This mispricing can come in the form of an over- or under-priced option within the context of the current scenario, or it can be a situation where all the options of a particular asset are over- or under-valued from a historical perspective. Either way, you will be able to see when this happens instantly in the Matrix, where implied volatility (the ultimate measure of option ‘cheapness/dearness’) is displayed for every option. Then you can construct a trade selling expensive options and/or buying cheap options, placing the odds in your favor.
2) What is it like to trade using OptionVue 6?
That’s like asking “what is it like to fly using instruments?”.
A pilot uses his instruments to extend his senses: being more aware of everything that’s going on, avoiding trouble, and flying with greater confidence and safety. In the same way, an option trader uses OptionVue 6 to ‘see’ everything that’s going on in the options arena, quickly finding trading opportunities, and avoiding costly mistakes, allowing you to manage positions with confidence and long term success.
3) Can OptionVue 6 be customized to show the information I want to see?
OptionVue 6 opens into your own personal trading workspace, a customizable view of the trading world as you’d like to see it. Build your workspace by adding information windows as needed.
You decide what information you want to see in OptionVue 6. Customize your Quotes Display to give you an overview of your favorite markets. The Matrix gives you vital data about actuals, futures, options, and your positions. You set up the Matrix cells to display precisely the information you want to see — from Theoretical Value, to the volatility information, to all the Greeks.
4) Will OptionVue 6 simplify my account management and tax reporting?
OptionVue 6’s user-friendly Portfolio Manager contains powerful features not found in general account tracking systems. It is designed to meet the special needs of option traders, and includes the ability to recognize complex option trades such as spreads, straddles, covered writes, and other combinations. It can automatically expire, exercise and assign your option positions, creates reports that allow you to track and analyze your performance over time, and generates your tax reports.
5) Can I see volatility information in OptionVue 6?
Within OptionVue 6, there are many places to view and track readings on both implied and statistical (historical) volatility. Let’s start in the Matrix. An option’s individual implied volatility is given for each option in the Matrix. It is a great indicator of whether an option is over- or under-valued and you’ll likely want it displayed on the Matrix at all times.
You can also see composite volatilities in the lower right corner of the Summary section in the Matrix. You can display “Calls IV”, “Puts IV”, or “Avg IV”. These numbers represent averages for all calls, all puts, and all calls and puts averaged together. These numbers are calculated from current prices in the Matrix.
The Model | Volatility screen is an area that requires a little more detailed discussion than available here, but, in summary, you may view 3-day running averages of volatility composite calculations as weel as the uniform volatility model.
The 3rd screen for viewing measured volatilities is accessed by clicking the Volty Chart button. Up to a 6-year years of both implied and statistical volatility are graphed together, along with a table at the bottom showing the averages for different time periods. There you get the “Big Picture” of an asset’s historical volatility.
6) Can I use OptionVue 6 to locate trading opportunities based on my specific criteria?
With our highly advanced Auto-Scan Tools, OptionVue 6 helps you quickly analyze the options market for more profitable trading opportunities.
The Survey feature allows you to look for assets possessing exceptional liquidity and volatility characteristics. You can specify exactly what you are looking for and the number of candidates that result. Search the whole Background Data Base, certain asset types (such as only stocks or futures), or a subsection of assets that you specify. Search by one criteria, and sort the results by a different one.
For the ultimate in locating hidden potential, OptionVue Systems’ proprietary OpScan service searches the universe of listed options, seeking special trading opportunities that meet your customized criteria. You setup exactly what you’re looking for and OpScan delivers the targets based on your input.
To help you pin down actual trading opportunities, OptionVue 6’s Trade Finder generates thousands of simulations to quickly generate a list of its top 50 trade recommendations. Trade Finder automatically analyzes over 20 different strategies and picks the best spreads, straddles, etc. with the greatest potential return while minimizing your risk.
7) Why should I use OptionVue 6 versus any other options analysis program?
OptionVue 6 is the most advanced options analysis software available. No other program comes close to OptionVue 6’s performance, accuracy, and ease of use.
And no other company partners with you the way we do, bringing you all the tools needed to trade with success: software, support, historical data, background information, quotes, and education. Our commitment to being your partner in successful trading means you are treated as a valued client, not a just a “user”, at OptionVue Systems.