The Easiest Way to Scan For Breakout Trades
When a stock is stuck in a tight range and then makes a major move up or down, it’s called a Breakout Trade.
Our Options Scanner and Charting system, Volatility Visualizer, is the simplest way to locate these high-probability breakout trades.
The charting tool, built specifically for Thinkorswim, allows traders to plot the upper and lower Implied Volatility moves using the monthly data provided in the options market.
The green lines are the upper monthly bands, and the red line is the lower monthly implied volatility bands.
Traders can monitor the Implied Volatility moves of the weekly options as well.
The blue line is the top of the expected move for a weekly, and the yellow is the bottom of the expected move.
Notice how the yellow and blow lines act as support and resistance?
Schooled Option traders shouldn’t be surprised seeing the outer boundaries act as resistance because option traders need to hedge around these crucial levels.
Following this powerful data for 5+ years, we have found a high probability approach to finding breakout trades before they make big moves.
Breakout Trade Setup: When names trade outside their expected move using the VV charting system but still remain inside the Monthly Implied Bands, this is the ideal set-up for a Breakout trade.
The trade (or the bet) is for the stock ticker to continue trending toward the weekly Implied Volatility breakout.
When you can get on the ground floor of these breakout trades, there’s certainly a lot of profit potential.
This 7 video series explains this groundbreaking charting system.
Below are the first three videos. The others will be released in the next issue.
Sign up for our training on Tuesday to learn more about this trading strategy.
Masters in Trading Digest - Issue 97
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Finding High Probability Options Trades with the Volatility Visualizer
The Volatility Visualizer is a charting tool built for Thinkorswim. It uses advanced scanning capabilities to narrow down a subset of trades we believe have the highest probability of breaking out from their present channel.
The tool is built to simplify the presentation of these names.
If specific tickers consistently outperform their implied volatility, traders may conclude that those symbols are priced too cheap in the market.
High Probability Volatility Scans for Options Traders with the Volatility Visualizer
The Daily Variance is just the expected move for any given day. Instead of looking at volatility monthly or weekly, use the daily variance to track the data daily.
Think of the Daily Variance as a 1-Day Vix. That's what it is because it extrapolates what the 1-day move is based on the current Implied Volatility reading.
You can technically use the daily variance to see where today's vol is ranked against the past.
A Smart Way to Buy Cheap Options with the Volatility Visualiser
Traders need to take advantage of the free information the markets provide, such as implied volatility, open interest, unusual options activity, and more…
The tool we built helps traders find high-probability trades based on the information provided to traders through the options market.
Too many traders settle on technical or simplified analysis to guess the direction of a given ticker.
Generally, traders find more consistency in trading the markets when using real statistical data to generate ideas.
Once using this data, traders seem surprised that they survived so long without using volatility and tracking a stock's expected move.
Traders should use the statistics shared in the Thinkorswim scanning tool to make educated, high-probability trading decisions.
These statistics include information about how often the stock has traded outside its expected move, which also means how often a stock outperformed its implied volatility.
Experienced traders find volatility as the most consistent form of options analysis.
Instead of guessing which way a stock moves, we encourage traders to speculate on how much movement a stock has instead of which direction that stock is moving.
Try it out!
FINAL THOUGHTS
WHAT TO EXPECT IN THE NEXT MIT DIGEST
The next issue will be released on Friday. It will include the final four videos of the series!
Don't forget to register for the training next week.
Until then, trade smart and always manage your tail risk.
Thanks for reading,
Jonathan Rose
P.S. Our most popular program, Unusual Options Activity, is available now to all digest subscribers for 99% off! Get it now!
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