Volatile trades watch-list Feb 2015

I am usually an income trader and rather trade positive theta trades, as it increases my chances of success. However, I often trade long options (negative theta) as a way to hedge and diversify some of my positions.

One of my favorite scans are trades that the break even point is 1/3 the ATR. That means that the average daily move of the stock is 3 times larger than the move needed to reach break even at expiration. This means that even a random move in my direction will be enough to show profit.

After scanning for these stocks (daily) I add them to watch list and start following them until i find a nice point of entry. I design the trade so the max loss is less than 3% the lost of buying the stock.

For example: $AAPL call strike 119 (price is 122.02) costs 3.7$. break even point is 0.6% and the ATR is 2.32$ (almost 4 times bigger) and expiration is in 10 days.

The volatility watchlist:

Volatile trades
ATR is 3 times larger than BE point

 

Charts:


 

Try OptionSamurai for free:

  • See all these stocks in OptionSamurai
  • Soon we will launch a pre-defined screen for ATR scans. For now you can scan the results manually¬†(you can even try it in the free demo):

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>