The Money Tree

Safely Generating Income in Retirement

A New Tool for Your Option Toolbox

Posted by mounddweller on December 4, 2010

All,

Today I’d like to reintroduce you to a tool I’ve been using for the past several months.  Back in June I posted a message about my investing buddy Patrick’s new option search engine on his Market Timing Research web-site (www.mtrig.com).   Using Patrick’s search engine you can find either call or put options which meet your specific criteria. 

You can search by: Market Sector (i.e., Utilities, Technology, etc.), Option Type (Call or Put), Desired ROIC (i.e., 1%, 2%, etc.), Expiration Date, Range of Stock Prices (ex. $10 to $50), Range of Price/Earnings Ratios (ex. 5 to 20), and Dividend Yield. 

Patrick has made a lot of updates to the search engine since initially rolling it out back in June.  For example, you can now search for option on practically the entire universe of stocks; small-caps, mid-cap, large-caps and even ETFs.  You can also limit your search to stocks that are approaching their ex-dividend date.

Search results have also been expanded.  In addition to containing the following fields: Stock Symbol, Stock Price, Option Type, Strike Price, Expiration Date, Last Traded Price of the Option, Bid and Ask Prices on the Option, Total ROI, Monthly ROI, Last Trading Day Volume, and the Open Interest; the results now also include implied volatility, the Greeks, and the dividend ex-date and pay-date.  The search results are displayed in a scrollable box on the screen.  Patrick has also provided a convenient way to export the search results to Excel.      In addition, you can quickly pull up a chart of the underlying stock.  The chart pops up in a new window.

So, why do I like this tool?  Well, first and foremost, it is quick and easy to use.  Also, it is web-based so you can access it anywhere you have an internet connection.  I have been successfully using the tool for the past six months to beta-test a new naked put strategy I’ve developed.

Here’s a link to the tool on Patrick’s site: http://www.mtrig.com/Members/OptionsAdvancedSearch.aspx.  Go check it out! 

Regards,

Troy

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7 Responses to “A New Tool for Your Option Toolbox”

  1. Rich said

    Troy, I signed up for Patrick’s new service a few weeks ago. I Started a scorecard by selling a DEC 4 put on OREX. I will keep you posted on my results. I started the scorecard with a debit which represents the annual fee for the service. It seems to be a great tool and fits perfectly in a put selling strategy.

    Rich

    • Rich said

      wanted to give all an update on my OREX trade. I opened the trade on Nov 16 by selling a DEC 4 put @ 1.10. The stock stayed above 5 for most of that time. sometime before the open of trade yesterday there was a federal announcment concerning one of there drugs and the stock only traded 1000 shares that day. Sometime prior to this morning a federal panel backed the use of a new weight loss drug. The stock shot up on heavy volume to 10.26. I bought back the option @ .05 this morning to lock in about 95% of the premium. I will let the stock settle out for a few days to see if I want to speculate anymore on this. In the meantime I will be using Patrick’s option search program for another candidate.

      Rich

  2. Dave said

    Hi Guys

    I always enjoy checking out the post written by Troy and the folk on this site… Always informative…

    Ive been selling covered calls since march this year. Thats all I really do as far as investing. Occasionally I will sell PUTS as well. But, its usually covered calls…

    I do have a system in place. Its a combination of the following three
    1) Fundemental analysis (IBD, MSN stock scouter rating)
    2) Techncal analysis (Support/ resistance lines, candle stick patterns, stochastics and MACD, CMF)
    3) Option strike Prices (Usually select strike price that fits my comfort zone)

    Most of the time, to find the candidates I use I will use the VISIONS scan, as well as a watchlist I have created.

    An example of the kind of trades I look for are the following.

    STEC

    On the 27th of August I saw this stock come down to an all important support zone of 11 dollars… The chart showed some bullish candlestick activity with credible volume. The fundementals were good enough for me at the time expecially considering this stock had come down from a resistance of 16 dollars. So I bought 200 shares.

    I immediatly sold 2 september 18 calls with a strike price of 11 dollars.

    Bought 200 chares of STEC $11.67
    Sold 2 SEPT 18 CALLS (strike 11) 0.98c
    =2.8% FOR 3 WEEKS with downside protection of 5.7%

    On the 18th of september STEC closed at $13.13 and I decided not to roll out. As a result I was exercised and make my 2.8%…

    My goal is to make 2-4% a month. If I can make more, thats fantastic, but 2-4% is the goal…

    Look foward to reading more and learning more from you all…

    Thanks guys

    Dave

  3. Dave said

    Hi Troy

    Just a question about VISIONS… Do you still use it to search for candidates?

    Also, have you ever used stocks from the IBD 100?

    What are your thoughts on using these stocks as candidates?

    Thanks Troy

    Dave

  4. mounddweller said

    Dave,

    Yes, I continue to use VISIONS. While I don’t use it exclusively to find CC and NP trades I do use it to evaluate every potential trade I’m considering.

    Regarding the IBD 100, I’ve never used it as a starting point for finding potential CC and NP trades. This is primarily because I see the IBD 100 as extreme momemtum trades. The slighest bad news on these stocks causes them to drop like a stone as people rush to sell and ask questions later. If you sell a CC on a stock like this it is easy to find yourself underwater very quickly. The same is true for NPs.

    Just my two cents, others may have a different opinion.

    Regards,
    Troy

  5. Dave said

    Troy,

    What are the technical and fundemental perimeters you use?

    I did learn a descent system for selling covered calls from Alan Alman (The Blue Collar Investor)…
    While I dont use ALL his system, Ive borrowed allot of it…

    His system uses stocks from the IBD100. I personally dont use the IBD100 anymore but do use the online IBD for fundemental analysis, which its excellent for. Also, I run the stocks im looking at through a screening process which rates stocks on a scale on 1 to 10. 1 is really risky, 10 is less risky. Here is the site in case you havent seen this before.

    http://moneycentral.msn.com/investor/StockRating/srsmain.asp

    Hope all is well Troy…

    Dave

    • mounddweller said

      Dave,

      I use basic fundamental and technical parameters when doing due-diligence on my potential CC and NP trades. For CCs I first run VISIONS Scout to see what stocks look good from a chart perspective. I then use Yahoo to look at basic fundamentals like P/B, P/S, Operating Margin, Net Margin, etc. I also look closely at the company’s net cash position (cash – debt). In this current economic environment I am very leary of companies that don’t have a rock-solid balance sheet.

      Technically, in addition to the parameters built into the VISIONS search I look at support and resistance levels and key moving averages. Support and resistance are particularly important to me when selling NPs. I also use the VISIONS “Put Factor” (PF) parameter when selling NPs.

      Hope this helps.

      Regards,
      Troy

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