Why It Pays to Develop Your Own Screeners

Why It Pays to Develop Your Own Screeners

In order to leverage the Option Party platform, users need their own screeners. By being able to customize their own screens, users can get the most out of our system and find trades that fit their strategies to a T.

There are a ton of systems out there. Sometimes it’s one person or a group of traders that are calling the plays. It’s up to the investor to execute the trade. But what if it involves a strategy they’re not entirely comfortable with? What if it’s an aggressive play and the investor tends to lean to more conservative trades?

With a trading system built around someone else, there’s no way it can fit every subscriber perfectly. Worse, the traders are relying on someone else rather than themselves. Think of it as: Give a man a fish, he eats for a day; teach a man to fish, he eats for a lifetime.

Not all trading services are this way. But many are “blanket strategies” that are not customizable. Option Party is an ideal way to up your trading game because it can be tweaked to your personal trading style. Better yet, it can be fine-tuned or adjusted when the trading environment inevitably shifts.

Building Your Own Screeners

The first thing to know is each Option Party user can have as many or as few screeners as they’d like. Say you want to create a few screeners, perhaps one for bearish setups, one for bullish setups and another couple for your go-to strategies. Once logged in, traders should click on the “Screeners” tab in the upper left. From there, hit the “+ Create Screener” button on the upper right hand side.

The title box is the first one on the left, which allows us to name our screeners. Before we adjust any of the probability calculators, let’s jump to the right side of the screen and work on the “Strategies” portion of the screener. Here we can blanket the strategy with a bullish, bearish or neutral bias.

Let’s say we pick “bullish.” That will activate the scanner to look through all sorts of different strategies, ranging from long calls to covered calls to bull put spreads. That may be too broad for some investors, as they may be looking for precise strategies. Luckily, we can also choose by individual strategy, too.

Going Beyond Directional Bias

If we were to scan right now without entering any other preferences, the Option Party system would return hundreds of trades. While that’s not necessarily a problem — given that the system ranks them for us via Party Rank — it does present us with the feeling that we could help that process with some of own filtering methods.

We can filter by almost every factor imaginable. For example, Option Party has net minimum credit and maximum net debit filters. It also allows us to decide how far out we want the option’s expiration to be, sorting by both minimum days and maximum days until expiration. Here’s a few more of the great features to search by:

  • Ex-Dividend Date (miss or capture)
  • Earnings (miss or capture)
  • ETFs (exclude or exclusively search for)
  • P/E Ratio
  • Market Cap
  • 52-Week Highs/Lows
  • Dividend and Dividend Yield
  • Earnings Per Share Growth
  • Assets and Debt
  • How far In- or Out-The-Money the Option is

Again, those are just a few of the metrics Option Party can scan for. Obviously we don’t have to use them all, but they can be helpful depending on the strategy. Looking for bearish setups? We can use these filters to find weak companies. Bullish investors can do the same thing to find strong companies and/or stocks with a bullish uptrend.

Final Thoughts on Screening Construction

There are a few other tidbits to creating the perfect screener. First, remember that traders have access to the “Ticker Screener.” This allows them to either exclude specific stocks or ETFs or scan exclusively for them.

Then there’s implied volatility (IV). Option Party went to great lengths to perfect the algorithms behind this feature. In a nutshell, the system can form an annual range of volatility for a specific security. From there, Option Party’s system allows all sorts of filtering by that range. For example, we can look for trades in stocks that are in the top 10% of their IV range. Conversely, we can look for those in the bottom 20% of their IV range, too.

There’s also probabilities. With these probability tools (on the left side of the screeners page), traders are able to slide between conservative setups and aggressive ones, or fall somewhere in between. They can adjust their maximum probability of loss and minimum probability of profit, among a few others. This will help determine each trade’s Party Rank.

Finally, don’t forget about Opportunity Alerts. The last filter on the list is “Notifications.” For each screener, we can decide if we want to receive alerts when new trades are found. Because Option Party constantly scans the markets for your setups, new trades will constantly be found. Depending on how specific the trade parameters are, this could be several times a day to just a few times a month. This is a great feature that prevents traders from missing their top trades just because they weren’t at the desk. Another neat component is that an Option Party user can choose which strategies use Opportunity Alerts and which do not.

These filters allow investors to whittle down the trades most likely to succeed for their particular strategy.

Read More

OTM vs. ITM: What Does “In-The-Money” Mean?

Finding Better Trades Starts With Better Filters

Ready to Filter Your Trades by Earnings and Ex-Dividends Dates?