How It Works
Use the screener for the “Wheel” strategy
You can read more about the “Wheel” strategy here. You sell an option for the symbol at the oversold strike price – if it never closes below the level, you get the premium and if it does you get 100 shares times the number of options at a deep discount. If you already own a stock, you sell covered calls against it at the overbought level. You do need the numbers for the specific strike and expiry that go with the screener to do that and those are what we are providing along with the overbought/oversold screener.
The screener is essentially a measure of the velocity of the move not the absolute value of the move. There were 23 total overbought/oversold or near overbought/oversold symbols out of 720 screened symbols on 06/30/23 as shown in the table above.
In the first column, we have sets of 3 rows that have Level 1, Level 2, and Data Since labels. The Data Since rows describe the date at which valid data is available for its computations. Next are the rows for Level 1 and Level 2. Let’s look at Level 1 first. In the rows for Level 1, a number greater than or equal to 1 indicates that on a price change % versus time basis, the symbol is overbought because it moved farther to the upside and faster than 99% of all other equivalent time periods in its history. These cells are highlighted light blue in the screener data file. In the rows for Level 1, a number less or equal to zero indicates that on a price change % versus time basis, the symbol is oversold because it moved farther to the downside and faster than 99% of all other equivalent time periods in its history. These cells are highlighted light red in the screener data file. Level 2 is similar to Level 1 except that instead of 99% of the history, it is 100% of the history implying the stock/ETF/index has never moved that far that fast for any equivalent period of time in my data set. Yellow highlighted cells simply highlight symbols that are near overbought or oversold on a Level 1 or Level 2 basis.
To sell options to express the long/short position, you can pick the option strike price directly from the tabular data associated with symbol as shown for TLT (which is screened as almost oversold) as an example in the table below as on 06/30/23. This data is available via subscription (free trial available!!) from www.slaytrader.com.
The data in columns C through P are based only on the prior days closing value and after market pricing and are designated as RAW data values. The screener values use the appropriate RAW data values to compute the overbought/oversold screener values – these values determine whether or not a symbol is judged to be overbought or oversold or almost overbought/oversold. The 1% screener lower limit values represent the maximum value of the 1% Raw Data lower limit values for the given expiration date (mins of upper limit). A once every 10 years calculation would be once every 2520 days which is 99.960% probability.
Price versus Probability capability provides the prices that the symbol is unlikely to close below for future dates for probabilities from 5% to 95% in 5% increments and represents a substantial capability increase for option traders interested in the “options wheel” or other strategies where a trader may be interested in owning the underlying but at a discounted price. The original functionality of providing probabilities of 1% to never lost remains the same. The data for each symbol can be looked up in the appropriate workbook via the “Price vs Prob Lookup” worksheet. Here’s what it looks like on 07/05/23 for TLT.
The data for each symbol also exists in the individual symbol worksheets in columns W thru AP.
The screener is designed for selling options, but it can also be used for a long/short stock portfolio. We screen 720 stocks currently and are adding more – we’ll eventually have all of the S&P 500, Nasdaq 100, and S&P 400 Midcap in the screener plus a few ETF’s and commodities. From a long/short perspective, you would add to positions when the stock/etf becomes oversold and trim when it becomes overbought.
Sell/Write options on indices like SPX to consistently generate income safely and beat the market returns.
Our data/technique is very different from the standard indicators you have come across. All of them predict what the ticker/index will do in the future. Our data goes back from the date the ticker started trading and predicts what the ticker/index will NOT do based on its past history. Our algorithm calculates the % move of price versus time to come up with the “no lose” strikes. The screener is essentially a measure of the velocity of the move and not the absolute value of the move. “No lose” strike means that strike has not lost since the ticker’s inception. For example in the data below from 06/30/23, the “No lose strike since inception” for SPX is 2905 for August 1st expiry. Which means if you write/sell a PUT at 2955, this strike has not breached or gone ITM (in the money) since 1962 which is 60 years. This is very valuable information for option sellers because it gives them a specific strike and expiry with a high probability of success, in this case 99.9933%.
We calculate these strikes every day after market close for all 720 tickers taking into account that day’s closing price since the ticker’s inception.
LIVE COMMENTARY
- Live commentary is core strength of SlayTrader and helps traders in many ways to learn and make trade decisions. It is one of unique way to get auction context irrespective of market condition.
- Starts with premarket summary with zones to watch and scenarios to be expected.
- All through the day, live commentary (text) about what is auction trying to do and what could be probable scenarios to unfold, explained with probe and negation zones.
- Clear intraday summary in defined formats apart from live commentary to suggest what kind of market we are dealing with like sell on rise or buy on dip or mean reversion etc. Provides precise support and resistance levels for follow through and negation.
- Actionable trade ideas with price objective and invalidation.
Learning
- Sharing various setups and nuances, I have learnt over time to monitor auction and manage trades.
- Archive of old discussions and shared nuances available to browse and refer.
- Recorded webinars in topics, ”Market profile framework”, “Selling options based on Market profile setups”, “Arriving at objective and invalidation from market profile perspective”, “Impact of psychological factors in trading”.
- Periodic online audio meeting with two way discussion.
discussion
- Discussion with members in open channels clarifying doubts,answering queries about auction and setups in making, view about their own trade ideas.
- Private discussion about clarifying their finding and doubts,individual trades, validating their market views , sharing wisdom on other topics such as trading errors,mindset,risk management etc
- Post market discussions related to market profile and other topics related to markets.
blog
- Private blog available only for members with articles such as how to practically use day open types, day types, tails, gaps, excess, failed auction and other articles related to market profile.
- Detailed daily report with summary of auction achieved, failed to do,what could be probable scenarios, new information from auction and refs to carry forward,clear trade ideas for next session.