Optionistics
Option Calculators and Stock Screeners
Symbol Lookup
HOT SHEET REGISTER FORUM FAQs CONTACT US RSS

welcome

Optionistics provides stock and option picks based on analysis of the options market.

Welcome to Optionistics

The most accurate predictor of pending changes in a stock's price is the rise in the price of a stock's options. When options on a stock are expensive, the stock price is much more likely to change.

At Optionistics, the stock and option markets are analyzed daily to determine which stocks have expensive options. The chain of options is further analyzed to determine which option contracts have the most volume, and whether the price of individual option contracts is cheap or expensive relative to other option contracts for the same stock.

This analysis shows where the option activity is and the sentiment of traders that are putting up money, sometimes very big money, in anticipation of a stock moving in a particular direction.

  If you are not familiar with stock options there is a complete tutorial covering the basics of options all the way through complex option trades.

 

Picking Stocks that Move

The price of an option is determined using a number of factors including how a stock's price has changed in the past. Some stocks commonly experience wide price swings over short periods of time while some stocks tend to stay within a tight trading range for relatively long periods of time.

What is a stock option?


A stock with wide price swings is more volatile, and will have more expensive options. The measure of a stock's potential to change in price is the volatility.
  What is volatility?
Knowing which stocks are volatile is enormously useful regardless of whether you trade stocks or options.   At Optionistics, volatile stocks are reported daily. 

Stock traders need to avoid tieing up money in stocks that don't move. Option traders benefit from knowing which stocks are volatile since selling expensive options increases the potential for profit.

The Volatile Stocks report shows the most volatile stocks every day. Historical Volatile Stocks reports are available for up to 30 days. To view the effectiveness of this report, choose a report up to 30 days old and examine the High/Low Change and % change for each stock. Historical performance of Volatile Stocks is updated daily.

  See the most volatile stocks

 Here is a sample of the most volatile stocks on May 9, 2006, and their performance as of June 8, 2006 

# Stock Name Stock Price Stock Volume Option Volume Implied Vol High/Low
Change %
1 MOVI MOVIE GALLERY INC 3.22 2,482,400 751 4.33 +5.13 +159.3%
2 VSGN VASOGEN INC 2.26 553,700 519 1.51 -0.50 -22.1%
3 AVII AVI BIOPHARMA INC 7.26 5,458,300 5,979 1.12 -3.18 -43.8%
4 KRY CRYSTALLEX INTL CP 4.98 1,531,800 2,252 1.11 -1.37 -27.5%
5 TMY TRANSMERIDIAN EXPLORATION INC 7.20 1,951,100 371 1.04 -1.53 -21.2%

The Implied Volatility is also charted on the Expanded Quote chart. The green line on the sample Expanded Quote to the right shows the 30 day price history for Alexion Pharmaceuticals on June 7. 

The black line shows the implied volatility for the past 30 days.

Note that the rise in volatility preceded a 10% move in the stock price. Option sellers would have received much higher premiums on May 16th and May 17th.

The drop in volatility near June 3 signals a period of inactivity, which may also signal a time to close option positions or sell any holdings in the stock.

 


Will the Stock Go Up or Down? 

 

Theoretically, the probability of a stock moving up is equal to the probability of it going down. Nonetheless, traders constantly take positions based on the expectation that the stock will either move in one direction or the other. 

Large buy orders in the stock market generally cause the price of the stock to rise. By the time the buy order is filled, the stock price has adjusted to reflect the increased demand for the stock. It is too late for the average trader to react to this demand.

 

Chance of Picking Winning Stocks

In the options market, large buy orders can cause an option price to rise, but may not immediately effect the price of the stock. When an option becomes expensive relative to the price of a stock, its implied volatility is high, which is usually a precursor to a significant change in the underlying stock price. There may be plenty of time (days, a week or more) to react to changes in the option prices, since these changes often precede a known event such as an earnings release, litigation settlement, an FDA ruling, etc.

 

Registered users have access to Volatility Skew charts.

In the Expanded Quote chart chart for ALXN above, option volume was high on 5/17 and the implied volatility was also high. This represents a strong bias towards either call or put buying. Option volume was also high on 5/22, but the implied volatility was normal. This indicates volume was mixed between buyers and sellers. The Expanded Quote chart shows the relationship between implied volatility over time. It does not show whether high volatility is the result of call buying or put buying.

The volatility skew chart to the right shows option volumes and the relative price of puts and calls for near the money strikes on the same day. This chart shows which contracts are expensive and which are cheap, and provides valuable insight into not only which contracts are  being traded, but whether they are being bought or sold as well.

In the sample chart to the right, there is a lot of volume on the $17.50 POZN calls, yet the price of the options are cheap relative to other POZN options. The relative cheapness of the calls indicates that calls are being sold. The seller of the calls is not expecting the stock to rise above $17.50.


Picking a Trade

 

Traders have different investment objectives and different expectations regarding the returns on their trades. Experienced traders know that increasing the return on an investment involves increasing risk.

At Optionistics, your risk tolerance can be matched against the degree of bullishness or bearishness to determine the most appropriate trade to match your trading style

 

Use the Stock Option Screener to find trades appropriate for your trading style.

 

 

An array of complex option trade screeners are available to assist in finding optimal trades. The trade screeners identify complex option trades where the implied volatility on the short leg is greater than the imnplied volatility on the long leg.

The trade screeners should not be used as an indicator of stock sentiment or as a predictor of the direction of price movement. The screeners are intended to identify trades that have an increased potential for profit if the stock moves in a particular direction. For example, if a complex option trade appears on the Bull Call report, this does not suggest that the underlying stock is likely to go up. However, the Bull Call trade that is identified will result in a greater profit than other similar trades if the underlying stock price go up. Complex option screeners can be run against individual stocks.

  Complex Option Screeners

 

 

Registered users have access to all available features, however data is delayed. Familiarize yourself with our site without risk or obligation. Subscribers get same day volatility data which is essential to making timely investment decisions.
Data Provided by HistoricalOptionData.com
Optionistics is not a registered investment advisor or broker-dealer. We do not make recommendations as to particular securities or derivative instruments, and do not advocate the purchase or sale of any security or investment by you or any other individual. By continuing to use this site, you agree to read and abide by the full disclaimer.