Option Trading Revolution:

AI Technical Analysis

With the advent of artificial intelligence(AI) technical analysis, options trading has undergone a significant transformation. Advanced machine learning techniques have revolutionized the way investors now analyze and interpret Market data. One of the key tools driving this transformation is AI technical analysis charts. Technical charts play a crucial role in options trading, providing valuable insights into the Market, its price patterns, potential future movements, even detecting subtle patterns and trends that might not be visible to the human eye. Understanding how to analyze technical charts is essential to making informed decisions quickly, in order to take advantage of Market opportunities as they arise.

Watch our video on the Benefits of Artificial Intelligence on Trading Options

Technical analysis charts are graphical representations of historical price and volume data. Charts are constructed using various methods, such as line and candlesticks, each providing different information to help traders identify patterns. One of the main benefits of using technical charts in options trading is the ability to spot trends. Given the variety of options trading strategies available, being able to quickly analyze price trends upwards, downwards, or even sideways can significantly increase the chance of success.

Mathematical calculations, or "Indicators" are applied to market data in technical analysis charts to help traders identify price trends, volatility, momentum, and overbought/oversold conditions in the Market. For beginners faced with the daunting task of both learning to trade options and technical analysis indicators, it can be overwhelming. Which indicators to put on the charts? How many indicators does the chart need? Which options trading strategies go with which indicators? Even for seasoned pros who have a firm understanding of options trading strategies, are too often limited by their bias towards a small set of indicators, unknowingly impacting their own decision-making, and distorting the objectivity of their analysis. Here's a typical example of a technical chart, the SPY option, with a couple of standard technical analysis indicators.


While the standard indicators do give some signal of trend direction, still a great deal of analysis would be needed before placing any trade. Now let's compare the same SPY option with SmartOptionsClub's technical chart and its proprietary overlays.

call option

The SmartOptionsClub's technical chart overlays first issued several Cherry alerts. The Cherry signified that a change of direction was coming soon. Prior to the Cherry notifications, the SPY had been downtrending until it reached its "oversold," (low point) condition. Soon after, another Cherry was sent, this time along with a Warning to anyone having bought Put Options on SPY, close the trades now. Finally, the Star and Bell alerts, both signalling buy Call Options are sent. Quickly SPY turns positive and recovers the losses it just incurred.

With manual study, the standard technical chart could have begun to identify trend reversals. But compared to the SmartOptionsClub's AI overlays, the standard chart fell far short. The AI assisted chart overlays determined the optimal entry and exit points, saving time by automating manual analysis tasks. SmartOptionClub's custom trading alerts service not only populated the chart overlays, but also sent out real time notifications with those alerts to its client's phones as the alerts were posted. This allowed clients to focus on other tasks while waiting for the favorable bell/star setups. Once the alerts were received, time spent studing the technical chart overlays was significantly minimized before placing the trade.

Studying AI technical charts for options trading improves trading skills while saving a considerable time in the process. By leveraging the benefits of standard technical analysis with AI Bell and Star entry points, and watching for Market direction changes with Cherries, traders make faster, more informed decisions, ultimately achieving success in trading options.

Be sure and watch our SmartOptionsClub Blog. We post our options alerts and AI chart overlays regularly there.