Ok fellow traders, I have been fooling around with PowerOpt for awhile, this software really does a great job at finding undervalued options and fat premium credit spreads and any strategy you are interested in based upon stock and option fundamental data. The option scanner allows you to fundamentally scan for your favorite strategies in real time, nice feature. Also I have been using livevol, it has real time buy and sell to open data a tick by tick volatility numbers, nice to have when you do not want to pay for fatted up premium, allows you to make some very nice straddle earnings plays. Ok here is the deal, I have(and I am sure you have as well) seen, advertised for years, the "Options 40 in 4" system by key-volume strategies inc. in TASC. They claim that by just using their magic mathematical formula you will be able to place 3 to 4 trades a week on the OEX that will give you a average of 40% profit in 4 days(hence the 40 in 4). They say the win rate exceeds 78% over a 20yr. time span. Does anyone use this strategy? They want $400 smackers for the strategy. I suspect that the are using some kind of Historical vs. Implied Volatility calculations along with some greeks. They say the strategy is not directional based. Ok what gives, can any one validate this system? My own idea is to sell credit spreads on fatted implied on the OEX weeklies to take advantage of colllasping impied and time decay. Haven't researched it yet(have been busy on earnings season) If you do not wish to give out the goods, then please send me a private message. Ok I am waiting for the feedback.
If they really had a track record like that they would be the richest people in the world by now and wouldn't be asking for $400. On a side note, weeklies are all about gamma not implied volatility or time decay.
Ok fair enough. However we all know that the implied and time decay collaspe accellerates in option expiry week, particularily in the last 3 days. Wouldn't the same apply for the OE weeklies since they are alwasy near expiration?
The expiration week is all about which options would expire ITM and which OTM so the biggest impact has gamma and not theta. For example, if the option is ATM with 2 days to go and it moves OTM then it's not time decay that causes the drop in premium but gamma.
There is actually no real way to see which trades are opening buys and opening sells. Sorry but that data is just not available. That 4 in 40 crap has been around for years, no one who has a reasonable knowledge of options would waste their time with it.
Ok that I figured. Yes I know that you cannot tell if the orders are by to open or sell to open, however, livevol does allow you to make a clearer discernement of whether the action is bullish or bearish on both sides of the option action, to make clearer choices. I am not a paid schill. Just think the software is worth it and they do have a free trial.
I am sure we appreciate your opinion but you tell me... When you see some puts trade in XYZ and you believe they're an opening trade how do you know if its bullish or bearish?