An algorithm for trading is a step-by-step, 100% computer driven procedure for analyzing the risk of a trade using technical analysis, considering variables such as time, price, and volume
Algorithmic trading, also known as black-box trading or robotic trading, is the use of computerized decision making for identifying trading orders. The computer analyzes all aspects of the trade, such as when to enter, the best strike price and expiration date, and can even initiate an order without human intervention. In this case, once the computerized analysis is done and a buy or sell opportunity is found, a chart symbol, overlay, will appear on your chart.
An Option is a contract to buy or sell a stock, ETF, or index. The keyword here is Option, the trader's discretion. An Option gives the trader the right, BUT NOT THE OBLIGATION, to buy or sell a stock, ETF or index contract at a specific price by a specific period of time until the Option expires. Options are considered derivatives, because the price of the option is determined from the price of the stock, ETF, or index on which it is based
The cost to purchase an Option is known as a Premium. Think of this as the cost to get in the game
To buy either the Call or Put option, you only need to have the amount of the premium in your trading account. The good news is that your risk in the trade is limited to that premium Say you bought 100 shares of XYZ company selling at $50/share. Now need $5,000 in your trading account to make that trade. Say the stock goes down $5. Until it comes back up, you lost $250 and your $5,000 is still tied up in that trade. But if you bought the Option to buy 100 shares of XYZ instead of the shares and paid, say $250 premium, your only risk is the $250 if the stock price does not come back up before your Option expires. And you only used $250 to make the trade. You didn't tie up all $5000.
Option prices are derived from an actual Stock, ETF, or Index. The Option price is known as the Strike Price. If you look at Option listings, you might see XYX Mar 50-Strike. This would give you the right to buy 100 shares of XYZ at $50 before the option expires in March
There are 3 types of strike prices for each Option: In the money(ITM), At the money(ATM), and Out of the money(OTM). ITM options have intrinsic value and are priced higher than OTM options. As a buyer you want your Option to be ITM. OTM's Premiums are almost always less costly than ITM options, making them more desirable to traders with less capital, but OTM Options have no Intrinsic Value. ATM Options' strike price is at or very near the current market price of their underlying Stock/ETF/Index.
In the Money:
Call Options -- strike prices a little lower than the current stock/ETF/index price
Put Options -- strike prices a little higher than the current stock/ETF/index price
At the money: strike price that is right at or very close to the stock/ETF/index price
Out of the money:
Call Options -- strike prices that are higher than the current stock/ETF/index price
Put Options -- strike prices that are lower than the current stock/ETF/index price
Depending on the type of Option you purchased, one of two things will happen if the Option expires In the Money. The Option will either settle in cash and the amount of winnings will be credited to your account. Or you will be able to purchase the 100 shares of stock at the price you paid for the Option.
However, if the Option expires Out of the Money, it therefore Expires Worthless, and the premium that you paid disappears from your account
The short answer is YES.
80% of Options Expire Worthless, especially those that are Out of the Money.
So what if we use that 80% to our advantage.
Instead of BUYING a Call or Put, what if we SELL the Call or PUT. You will need to do a little out of the box thinking on this.
If you SELL a Call Option, you actually expect the stock/ETF/index to go down. If you SELL a Put Option, you actually expect the stock/ETF/index to go up. Seems convoluted right? What is the point?
When you BUY an Option, you have to pay an upfront premium to get into the game. That amount of money is instantly taken out from your brokerage account. BUT, if you SELL an Option, instead of the premium being taken from your account, the premium is deposited to your account. And if the Option Expires Worthless, you get to keep the premium amount. Since 80% of the Options expire worthless, you have an 80% chance of keeping that cash.
You are looking to SELL a Put Option because you think that the Stock/ETF/Index will go up. (Remember: Sell a Put = going up, Sell a Call = going down)t
Unlike Stocks or ETFs whose current price is generally set based upon fundamentals, such as earnings, Options tend to be based on emotion, almost like an EBAY auction. A 10% move up in a stock can result in a 50 to 100% increase in the price of the Option. Say XYZ went from $50 to $55, a 10% increase. But that Option price may increase from $250 to $300, $400 or more
But hold onto that Option until 2 or 3 days before it expires, and the emotion has gone out. Now even if the Stock or ETF rallied, the Option price may not reflect the same move. In Options trading this is known as Time Decay
Depending on the Option, it will either settle in cash if at expiration date the Option is In the Money, or it will settle in Stock/ETF shares. While you can wait until the Option expires, considering Time Decay, if the Option is profitable, you might want to close the trade out before it expires and take the cash
Technology, Semiconductors, Treasury Notes, Indexes, Gold and Crypto.
These sectors move with the overall direction of the Market. Our Alerts concentrate on Options that expire daily where you can trade in and out in a couple of hours
You are limited to three day trades in a five trading day period, unless you have at least $25,000 in your brokerage account by the end of the previous day. This is known as the Pattern Daytrading Rule. However, if you trade Futures Options, the Pattern Daytrading Rule does not apply and you can trade as many Options weekly as you want.
SmartOptionsClub's Alerts are generated 100% by computer algorithms. Whenever any one of the Options that we are monitoring meets the criteria of Buying or Selling, you will receive an Alert on your phone
Discord is a free instant messaging social platform. Users have the ability to communicate through text messaging. SmartOptionClub uses Discord to send the real time alerts to you. You will need to register for a Discord account to receive the Option Alerts. Download Discord onto your phone through Google Play
Once you subscribe to SmartOptionClub, you'll be given the channel to log into
Along with the real time Alert, SmartOptionsClub will also send a trading chart of the Alert with the symbols clearly marked. The chart can be displayed on your phone. If you want to see a larger live chart for the Alert, clicking the link on the Alert will bring up a live TradingView chart. You will need to register for a free TradingView account to see the chart and the overlays provided by SmartOptionsClub
SmartOptionsClub is always on the lookout for affiliates who want to share in the commission of sales on our Alert Service and Comprehensive Trading Course. If you are interested, send an email with your contact info to email@example.com. We look forward to hearing from you.