An option screener is a tool that evaluates
options based on criteria and generates a list of potential
trading ideas. Most people who trade options are
technical traders. It essentially means they look for patterns in charts. Also they use statistical correlations and deviations and give them
Greek names
In the modern world, Greeks names are the personal names among people of Greek language and culture generally consist of a given name and a family name.
History
Ancient Greeks generally had a single name, often qualified with a patronymic, a cl ...
like
alpha
Alpha (uppercase , lowercase ; grc, ἄλφα, ''álpha'', or ell, άλφα, álfa) is the first letter of the Greek alphabet. In the system of Greek numerals, it has a value of one. Alpha is derived from the Phoenician letter aleph , whic ...
,
beta
Beta (, ; uppercase , lowercase , or cursive ; grc, βῆτα, bē̂ta or ell, βήτα, víta) is the second letter of the Greek alphabet. In the system of Greek numerals, it has a value of 2. In Modern Greek, it represents the voiced labiod ...
, delta, theta, gamma, vega, and rho.
Few professional money managers use
technical analysis
In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the sam ...
and these tools are typically used by individual traders. Its counterpart,
fundamental analysis
Fundamental analysis, in accounting and finance, is the analysis of a business's financial statements (usually to analyze the business's assets, liabilities, and earnings); health; and competitors and markets. It also considers the overall state ...
, similarly uses some math to generate ratios, but the inputs and outputs are much more tangible (e.g. income, revenue, assets).
Overview
Options, particularly exchange-traded options, are highly volatile securities whose market prices can change rapidly. In addition, the number of options in a market can be large. For instance, as of December 2013, there were over 550,000 individual equity option contracts, written on nearly 6,100 underlying stocks and exchange-traded funds (ETFs), listed on the various U.S. options exchanges. Each contract is typically listed on multiple exchanges, resulting in millions of separate option prices that all change in real-time.
Screening criteria
Being able to isolate option plays that appeal to a specific trader is a vital component of a useful option screener. To do this, the option screener needs to allow the trader to define filters that narrow down the options based upon what the trader deems important. Typical filters include, but are not limited to:
*
option expiration
*
historic volatility
*
implied volatility In financial mathematics, the implied volatility (IV) of an option contract is that value of the volatility of the underlying instrument which, when input in an option pricing model (such as Black–Scholes), will return a theoretical value equa ...
*
moneyness
In finance
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the disc ...
*
open interest Open interest (also known as open contracts or open commitments) refers to the total number of outstanding derivative contracts that have not been settled (offset by delivery).
For each buyer of a futures contract there must be a seller. From the t ...
*
option price
*
p/e ratio
*probability
*
put/call ratio
In finance the put/call ratio (or put-call ratio, PCR) is a technical indicator demonstrating investor sentiment. The ratio represents a proportion between all the put options and all the call options purchased on any given day. The put/call ratio ...
*
share price
A share price is the price of a single share of a number of saleable equity shares of a company.
In layman's terms, the stock price is the highest amount someone is willing to pay for the stock, or the lowest amount that it can be bought for.
B ...
*
stock exchange
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
*
strike price
In finance, the strike price (or exercise price) of an option is a fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying security or commodity. The strike price may be set b ...
*
intrinsic value
*
premium
Premium may refer to:
Marketing
* Premium (marketing), a promotional item that can be received for a small fee when redeeming proofs of purchase that come with or on retail products
* Premium segment, high-price brands or services in marketing, ...
*volume
See also
*
Stock selection criterion
In financial markets, stock valuation is the method of calculating theoretical values of companies and their stocks. The main use of these methods is to predict future market prices, or more generally, potential market prices, and thus to profit f ...
References
Options (finance)
Derivatives (finance)
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