Options Scanner and Charting System
Our Options Scanner and Charting system, Volatility Visualizer, is the simplest way to locate 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.
This 7 video series explains this groundbreaking charting system.
Below are the final four videos. You can catch the first three in our previous issue.
Sign up for our training on Tuesday to learn more about this trading strategy.
How to Scan for Volatility Breakouts with the Volatility Visualizer
Masters in Trading Digest - Issue 98
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When symbols trade outside the weekly expected move – labeled on the scanner as “true” and inside the monthly moves “true” – these are the subset of trades we should consider for a breakout trade.
Before entering a trade, all traders need a real reason for being in that trade.
A trader should be able to answer two important questions:
- Why did you enter the trade?
- What is the intended outcome of the trade?
This is probably one of the biggest issues we see traders struggle with.
Trading without a plan is akin to gambling. Every position needs to have a specific role or serve a specific purpose within the portfolio.
Once it's done its job, it can be liquidated.
Short-term trades are most often used either for
- hedging a portfolio of stocks
- short-term speculation
We encourage traders to consider more analysis before settling in on a trade.
Next Level Breakout Trading Scans with the Volatility Visualizer
When traders use the Daily Variance, you will see a few choices – for instance, you can only search for names with Daily Variance under a certain percentage, like 3.5%.
Better yet, you can also search for names that have down-trending Daily Variance or up-trending Daily Variance.
We encourage traders to be creative when scanning for these breakout trades, utilizing up-trending scans and down-trending Daily Variance scans to see what you can learn.
When the Daily Variance trends are higher, this just means the daily movement of the underlying ticker is trading more volatile than in days past, which might be a sign that option pricing is getting more expensive.
We want to find options to buy when the Daily Variance continues to trend lower; that’s when traders want to own options.
Exploring Options with the Volatility Visualizer Scanner
Once traders build a foundation with the scanner, they can really start to have fun.
Volatility Scans for Sector Analysis with the Volatility Visualizer
Volatility Visualizer is a trading tool meant to be used daily for every trade. That’s how we use it, and we encourage you to track those expected moves.
FINAL THOUGHTS
WHAT TO EXPECT IN THE NEXT MIT DIGEST
The next issue will be released on Monday.
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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