Identifying the perfect option takes time.
Not Anymore.
OptionID Process
Step 1:
Analyze
Liquidity
Option or strategy volume.
Implied Volatility
Relatively cheap or expensive options.
Technical Analysis
Identify an opportunity on the price chart.
Price
Study the price and underlying.
Strategy Selection
Selecting the right strike(s).
Capital Allocation
How much money to commit? How much to risk?
Trade Criteria
Executing the identified trade.
Step 2:
Risks
Technical Risk
Identify possible weaknesses from the chart.
Price Risk
Option or underlying pricing weakness.
Strategy Selection Risk
If the trade is unsuccessful can it be adapted or altered?
Capital Risk
Loss of capital.
Step 3:
Score
Analysis Score
Aggregate score from analysis criteria.
Risk Score
Aggregate score from risk assessment.
Final Score
Final OptionID determination.
Step 4:
Execute
