Go to http://ExpertOptionTrading.com/videos for more free videos on Equity Options Let's go back and take a look at that again. They're predicting a fairly small range in which this stock is going to be moving, based on its current volatility. That's assuming, of course, that the volatility remains the same. It could change. Right now, with the volatility extremely low, it looks like this stock moves around quite a bit. This may not be a bad choice. All things being equal, we want those with a profit index as high as possible, with lowest historical volatility. Right now, Netflix looks like it's probably going to be the best choice, because the profit index is relatively high. The range index is the highest of all of the issues that we've looked at. The cost index is at the lowest end of the range of all the ones that we've looked at. And it's currently at a historical low probability. That is a very good candidate. Our second candidate would probably be AVP, Avon Products. Historical low volatility, relatively high range index, relatively low cost. It gives us a nice profit index. We would eliminate some of these other candidates. Usually, I use this last column here to cross out the ones that I am not interested in. I would cross that [QQQs] out immediately, because of the high volatility. I would cross out that [JNPR], because of the high volatility. That is out, that is out, and that is out. Then, I would go back again and look at this one, which has a relatively small profit range, and profit index. I would eliminate that issue. Just by the process of elimination, go down through each one of these, to determine which one we should probably be doing. Disney is in the middle of its range, so it could come down a little bit, but the range index is fairly low, at 0.24. The cost index is a little bit high, so I would eliminate that. Now, we have three potential issues here. Netflix, Avon Products, and Clear Channel Communications. As I noticed on this chart, Clear Channel Communications actually seems to move around quite a bit. Let's take a look at the last 60 days and 60 minutes of this chart. You can see, over a 60-day period, this has not moved at all. That's why the profit index has dropped down to 0.51. Over a 60-day period... Remember, we only have 20 days to expiration. The reason that we're using the front-month option again is because we want the highest Gamma we can possibly get, to affect our Delta. The more our Delta changes, the more opportunities we're going to have to scalp this stock. If we take a look at this, for the past 60 days, you can see that the stock has hardly moved at all. I believe that's because they received some sort of bid-out offer, some sort of takeover offer. That's why the stock has not moved. We're going to immediately eliminate that option. Let's take a look at AVP again. We need to look at it over the last 60 days, on a 60-minute chart. This has moved relatively well. It's been up and down. It looks like it's moved within a channel, and we may have had a number of opportunities over the last 60 days, in order to actually scalp this stock. That is a fairly decent option here. That is a fairly good candidate. For more Equity Options videos be sure to check out our channel: http://www.youtube.com/user/howtotradeoptions To learn more about the Expert Option Trading course go to: http://ExpertOptionTrading.com Additional Tags ================ vertical spreads, options greeks, what is options trading, option volatility, option spreads, options volatility, how to trade in options, option strategies, index options, equity options, virtual trading, options spreads, virtual options trading, options trading tutorial, option trading strategy, options trading course, how to trade stock options, options trading systems, options training, learning options, learn to trade options, option trading tutorial, options trading strategy, option trading course, option trading systems, options trading basics, option trading basics, option trading system, options trading courses, options trading training, trade options, what is a stock option, options strategies
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Duration: 8m 38s
Rating: 1