Option screener
Encyclopedia
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 like alpha beta theta gamma. Technical analysis
can be very useful, but very few professional money managers would dare use it by itself. It's counterpart, fundamental analysis
, similarly uses some math to generate ratios, but the inputs and outputs are much more tangible (e.g. income, revenue, assets).
, 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 October 2006, there are over 185,000 individual equity option contracts, written on nearly 3,000 underlying stocks, that are listed on the various U.S. options exchanges. Each contract is typically listed on multiple exchanges, resulting in nearly 1,000,000 separate option prices that all change in real-time.
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Technical analysis
In finance, technical analysis is security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis incorporate technical analysis, which being an aspect of active management stands...
can be very useful, but very few professional money managers would dare use it by itself. It's counterpart, fundamental analysis
Fundamental analysis
Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. When applied to futures and forex, it focuses on the overall state of the economy, interest rates, production, earnings, and...
, similarly uses some math to generate ratios, but the inputs and outputs are much more tangible (e.g. income, revenue, assets).
Overview
OptionsOption (finance)
In finance, an option is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the...
, 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 October 2006, there are over 185,000 individual equity option contracts, written on nearly 3,000 underlying stocks, that are listed on the various U.S. options exchanges. Each contract is typically listed on multiple exchanges, resulting in nearly 1,000,000 separate option prices that all change in real-time.
Screening criterion
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 ideal options based upon what the trader deems important. Typical filters include, but are not limited to:- option expirationExpiration (options)For an option contract, expiration is the date on which the contract expires. The option holder must elect to exercise the option or allow it to expire worthless.Typically, option contracts expire according to a pre-determined calendar. For instance, for U.S...
- historic volatilityVolatility (finance)In finance, volatility is a measure for variation of price of a financial instrument over time. Historic volatility is derived from time series of past market prices...
- implied volatilityImplied volatilityIn financial mathematics, the implied volatility of an option contract is the volatility of the price of the underlying security that is implied by the market price of the option based on an option pricing model. In other words, it is the volatility that, when used in a particular pricing model,...
- open interestOpen interestOpen interest refers to the total number of derivative contracts, like futures and options, that have not been settled in the immediately previous time period for a specific underlying security...
- option price
- p/e ratio
- put/call ratioPut/call ratioPut/call ratio is a technical indicator demonstrating investors' 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 can be calculated for any individual stock, as well as for any index, or can be aggregated...
- share priceShare priceA share price is the price of a single share of a number of saleable stocks of a company. Once the stock is purchased, the owner becomes a shareholder of the company that issued the share.-Behavior of share prices:...
- stock exchangeStock exchangeA stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
- strike priceStrike priceIn options, the strike price is a key variable in a derivatives contract between two parties. Where the contract requires delivery of the underlying instrument, the trade will be at the strike price, regardless of the spot price of the underlying instrument at that time.Formally, the strike...
- intrinsic valueIntrinsic valueIntrinsic value can refer to:*Intrinsic value , of an option or stock.*Intrinsic value , of a coin.*Intrinsic value , in ethics and philosophy.*Intrinsic value , in philosophy....
- premiumPremiumPremium may refer to:* Premium , a promotional item that can be received for a small fee when redeeming proofs of purchase that come with or on retail products....
- volume
List of popular screeners
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