Option alpha signals pdf download

It is the means by which individuals, companies and central banks convert one currency into another — if you have ever travelled abroad, then it is likely you have made a forex transaction. While a lot of foreign exchange is done for practical purposes, the vast majority of currency conversion is undertaken with the aim of earning a profit. The amount of currency converted every day can make price movements of some currencies extremely volatile.

It is this volatility that can make forex so attractive to traders: bringing about a greater chance of high profits, while also increasing the risk. Read More : Option Alpha Signals. Please check this link for the download: Courses Download. Most of products will come to you immediately. But for some products were posted for offer. We need time to make files and upload. It takes hours We will try by our best to have download link on time.

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BlackFriday coming!!! Option Alpha Signals quantity. Add to wishlist. Get insights from 12 months of backtesting research of more than 1, different technical analysis indicator variations. We revealed our Top 5 indicators with specific settings that resulted in the highest overall returns, safety and consistency long-term. About the Author… Kirk Du Plessis is a full-time options trader, real estate investor, and stay-at-home Dad.

Can I look inside before purchasing? Du Plessis. Neither the Company or any of its afAiliates, owners, managers, employees, shareholders, ofAicers, directors, other personnel, representatives, agents or independent contractors herein referred to as the Company is, in such capacities, a licensed Ainancial advisor, registered investment advisor, registered broker-dealer or FINRA SIPC NFAmember Airm. Reproduction and distribution of this document, or any form of its content herein via email, social media, download, hard-copy, etc.

Examples presented on Companys website including video tutorials, indicators, strategies, columns, articles, emails, reports, downloads, and all other content of Companys products collectively, the Information are provided for informational and educational purposes only. Such set-ups are not solicitations of any kind or order to buy or sell a Ainancial security and should not be construed as investment advice under any circumstances.

Home About Services Team Contacts. Currently there are no plans to print hard copies as of right now. If Christian Louboutin outlet strap me in who knew they did that? Here are some things to bend in for while I jolt a grain bound food though both drill my dogs hot food, keen will always end ourselves card without ourselves permission?

Juuhuuu evo i mene konacno uspela. Just contact us via the support page or tweet at us OptionAlpha. The efficacy of both technical and fundamental analysis is disputed by the efficient-market hypothesis which states that stock market prices are essentially unpredictable. You see, every successful business has an edge that gives them a long-term competitive advantage over someone else or some other company marketplace.

And before we dive deeper into options implied volatility, I Airst want to cover the business models of casinos and insurance companies. They make money on small, theoretical probability imbalances in each of the hundreds of gambling games they create. And they do this either through reduced payout or the reduced odds of winning over time.

Lets say they have a game to simply Alip a two-sided coin. Sure you might get Heads a couple times in a row but if you Alipped the coin 10, times you expected roughly 5, Heads and 5, Tails. In this example, the casino has NO edge with regard to the expected outcome or probability of the coin Alip that they control.

Well, that's assuming they don't have some sort of weighted coin. Now, the casino might then designate Heads as the winning side and Tails as the losing side - nothing odd there either. But here's where the casino creates an imbalance in the way they pay out winnings. This is their edge, and it's purely a math based approach to making money. But what if we take it one step further. Quite the gamble but you're up for it. Table limits prohibit players from betting too much on any one roll, spin or play.

Having this table limits increases the number of plays a person will make which thus increases the house edge back to the casino. The longer you play, the more you stand to lose - period. Remember, their edge only proAits from many coin Alips and payouts.

This, of course, was a simple example to prove a point. If you do research more into casino math and probabilities, you'll Aind the same logic holds true with games like blackjack, roulette, craps, etc. Each game is stacked in favor of the casino either through reduced payout or the reduced odds of winning over time. I'm sure you're starting to see why "edge" is so important to your ability to generate consistent income with options.

And before we get deep into the implied volatility "edge" that I'll describe, I think it's warranted that we also cover how insurance companies make money. It's slightly different from how casinos make money, and it sets the foundation for options trading beautifully. So, let's talk about insurance brieAly Unlike casinos, insurance companies cannot build a game that controls the probability of winning or losing.

They can't control how many houses burn down, how many car accidents happen or how many people die each year. So, they have to manage their business "edge" by overpricing policies above and beyond their expected loss. This works in nearly all cases but lets take life insurance or the payout your family receives when you die, as our primary example.

When you apply for life insurance, you'll Aill out a big stack of paperwork about your age, weight, health history, medical issues, and regular activities that you participate in. The insurance company actuaries then take all your data and plug it into their models to predict or imply your life expectancy into the future.

If you're in good health, non-smoker, non-racecar driver, you're statistically likely to live a long time - maybe another 50 years.

If you're not in good health, overweight, smoke, skydive on the weekends, you're not likely to live as long of a life statistically - maybe another 30 years based on the models. Again, it's all math based.

Once the insurance company knows the probability of you dying before the end of the policy, they can build a policy just for you that charges you some amount over and above their expected loss when you die. Referencing the chart to the left, if the probability of you dying was 0. Notice that they can't control the likelihood of you dying but they can control how much money they are willing to take in order to ensure your life.

They are basically assuming you'll die sooner than the model is telling them you will and charging you more money up front. This is called over-expectation, and it happens in all forms of insurance; car insurance, Aire insurance, liability insurance, etc.

From here the insurance company's goal is simply to minimize risk by writing as many policies as they can. This about it logically, it would be too risky for them to have one policy outstanding on you alone and nobody else. But if they wrote life insurance policies on , people just like you, then the likelihood that they all die tomorrow or anytime soon is practically nonexistent. Notice it's the same take on risk and probability as we discussed with casinos applying table limits.

Casinos want you to place lots of small bets so that one play doesn't skew the results. Insurance companies want to endorse as many small life insurance policies as they can so that one person dying doesn't bankrupt them. As options traders, we need to follow similar logic and structure with regard to how we run our business.

Namely, once you understand the math; you'll master the game. Hopefully, the concept of "edge" is becoming clearer? The casino, insurance company and the options market are nothing more than games of math and probabilities. And now that we have a solid understanding of edge lets talk about my favorite topic: implied volatility.

Logical right? Now, the second component of an option's price is Extrinsic Value or Time Value. This is the additional premium that is priced into an option which represents the amount of value given based on the remaining life of the contract.

Generally speaking, an option contract with days until expiration is more valuable than an option contract with 20 days until expiration. The price of time, therefore, is inAluenced by various factors in the market, such as the number of remaining days until expiration, current stock price, current strike price, and interest rates, but none of these are as signiAicant as implied volatility. Implied volatility is the only element or piece of an option's Extrinsic Value that is "unknown" or "estimated" by the market.

Another fancy way of saying "estimated" in Ainance is to use the word implied". We can calculate how many days are left until expiration. We know where the stock price is relative to the strike price or the contract's intrinsic value. And, we can look up the current long-term interest rates. The ONLY data point in an options price we don't know for certain is how volatile the stock will be in the future.

Sure, we can easily see how volatile a stock has been historically but what will happen in the future, say 30 days from now when we reach the next expiration date? Again, we don't know for certain, so we have to imply, or estimate, the future volatility. In the most simple terms possible, implied volatility is derived from an options current price and shows what the market implies about the stocks volatility in the future.

It's based on the pricing from a combination of at-the-money and out-of-the-money calls and puts on both sides. In other words, the market itself determines expected or implied volatility through the activity of the investors like you and me placing trades. It's important because all else being equal, an option's price will move up and down with the rise and fall of implied volatility.

This means than an option contract could gain or lose value purely on the market's changing expectation of volatility even if the underlying stock price doesn't move at all. There are not many Ainancial products that are priced so aggressively on the future expectation of volatility as with option contracts. Probably not worth anything at all because the likelihood of actually seeing a proAit is incredibly small. Consider this the "lottery ticket" example because just as a lottery ticket's price might be cheap, the probability of winning is extremely low.

Likely much higher because the stock has a greater potential to move into a proAitable zone at expiration. Naturally, if the stock is expected to swing wildly in the future than the value of options on both sides, calls and puts, would be higher because traders expect a higher chance of making money. Hence, the relationship between implied volatility and an option's price can be summarized as the following:. Notice, that it's not one-sided here meaning all option values increase, on both sides for calls and puts, with higher implied volatility like a tide raising all ships at sea.

And, market expectations of implied volatility change day by day as new information about the company, their industry, the economy, etc. Everything that is known or assumed is priced into the future implied volatility estimate. With me so far? It's pretty logical how option pricing works when you break it down like this huh? But there's one key point we haven't deAined, until now, and that's our "edge".

Over-Expectation of Implied Volatility I've likely convinced you by now of two important truths when it comes to options trading. Neither point can be argued because the data supports both cases. First, Ainancial markets are efAicient, in the sense that there is no "edge" you can gain picking stocks directionally. Second, that implied volatility, i.

If both of these statements are true, then the next reasonable question to ask is, "If the markets are efAicient and implied volatility inAluences option pricing, then how can we gain an 'edge' trading options? Here's the long awaited answer In even simpler terms, we consistently sell options that are overpriced because of implied volatility.

And, understanding and accepting this statement is the key to your ability to trade options successfully long-term - period, end of story. It could have been up or down but in any case, the market had higher expectations than what actually took place.

Think back to our life insurance company example in the previous pages. Life insurance companies price their policies on the expectation that people die more often than they actually do in reality.

In essence, they priced the policy with some margin a. I use the watch list every single day! Implied volatility commonly prices in a more volatile move in the underlying stock than actually occurs.

Therefore, the value of option contracts, both calls and puts, at the beginning of an expiration cycle are always slightly high relative to what it ends up being when the underlying stock moves play out.

Our "edge" therefore, is decisively in selling these over-priced options; much like an insurance company selling life insurance. Except, well, we can make money without having to ensure someone's death.

In typical fashion, I don't just want to spout off theory. I want to prove that this over- expectation caused by implied volatility is a reality so that you become even more conAident in your ability to trade options successfully for years.

The blue or teal colored line shows the monthly implied volatility reading each day. The lighter green line shows the actual or realized volatility 30 days from the date of measurement for each period. So, was the Dow Jones less volatile than the market expected it to be?

On average, the DIA expected the market to have a slightly more volatile environment than had been realized over the last 13 years. The average difference between the DIA's implied volatility and actual volatility during this period was approx.

This indicates that the options market consistently expected DIA to move on average 6. Those traders who are net option sellers more often than net option buyers have a deMined, mathematical edge even in an efMicient market. In the case of DIA above, you've got undeniable proof that long-term option pricing during this 13 year period was overpriced, meaning that option sellers, not buyers, were the real winners here.

Sure there were times when volatility was brieAly greater than expected, namely in , but the long-term data is consistent with this implied volatility over- expectation that we've discussed. Let's look at some more examples.

Again you'll notice that actual volatility was much less than the market's implied volatility. The spread for GLD between actual and implied during this period was 5. Yet again, implied volatility exaggerated the actual move in TLT by 5. There you have it, three incredibly liquid and popular market ETFs tracking stocks, precious metals, and bonds; all of which show the same implied volatility over-expectation. Congratulations, you've now discovered the "edge" you have as an options trader; consistently selling options due to the over-expectation of implied volatility.

Feels good right? You bet it does! Determining Implied Volatility's Ranking Know that you know what our "edge" is trading, you can absolutely sell options on a consistent basis and make money long-term. But what if you want to dramatically increase your win rate, probability of success and proAits while trading less often?

Well, you can by focusing on selling options when implied volatility readings are higher than average, and our "edge" is maximized. I relate this to picking apples from a tree. You're free to pick all the apples you want, and they're all ripe and taste great, but it's the low hanging fruit that is easiest to pick. A way of accessing if the implied volatility reading we are looking at is really high or not?

Luckily, we have an indicator that we use to determine if implied volatility is ripe for selling or too low and should be avoided, and its called implied volatility rank IV Rank. The goal of ranking implied volatility is to determine when option pricing is relatively expensive compared to its historical past for a given security.

Applying IV Rank helps us compare stocks we are analyzing on an apples to apples basis - making it easier to see which stock has the highest volatility and therefore is the best candidate to sell options on.

You might expect technology companies to be a little more volatile than energy companies. Using this range, let's apply an absolute ranking scale; from 1 to Now do you see how using a ranking indicator helps brings some context to AAPL's implied volatility? Not signiAicantly low or high at the moment. The 50th IV Rank becomes the line in the sand for choosing between net option selling strategies and net option buying strategies. If IV is above the 50th rank, we need to be option sellers; if it's below the 50th rank, we should either avoid option selling or be less aggressive option buyers.

Remember, our deAined and mathematical edge is selling options, not buying them. This doesn't mean you can't use option buying strategies at all, you can, it's just that they shouldn't be the foundation of your trading system. It's important to note here that implied volatility is always shifting. As the market or expectations by the market participants change so does IV. Hence, it's critical you accept that IV could always go much higher or much lower than whatever it's current reading is at.

So you'll need to scale your strategy, and approach as IV rank leans toward the extreme ends of the spectrum. For now, the key takeaway for Step 2 is your need to determine if IV rank is above or below the 50th rank. Above 50 we're sellers; below 50, we're either not trading or buying options on a small scale. Answering this question further cuts the list of possible options strategies down by half. Quickly recall the story I told about my grandfather, the carpenter, and how we laid all the tools out on the table trying to Aind the best one for smoothing out the wood surface of some boards.

In the end, we were left choosing between an electronic belt sander and a small hand-held block sander. Both would have accomplished the job but in our case, the belt sander was the better Ait because we needed to sand long, Alat stretches of boards. Had we needed to do some Aine sanding around edges or curves, possibly the small hand-held block sander would have been the better choice. The same general concept applies here in Step 3 with choosing the best options strategy for whatever market setup you're analyzing.

All of the options strategies that remain after you apply the directional and IV rank Ailters will get the job done. But maybe one particular options strategy, however, will accomplish the mission a little better than the other.

Before I set you free to bolt through the 18 different strategy guide pages that follow, let's quickly go over an example start to Ainish together. Just so we're clear on how to work through the steps. You don't really care where it goes up, down, left, right, etc.

Well, you've now completed Step 1 and made a directional assumption. A reading at the 70th rank is above the 50th rank level used to determine whether we should be option sellers or option buyers. In this case, we have to be options sellers because IV rank is higher than You've now completed Step 2 and determined IV relative ranking. With only three options strategies to choose from, your decision just got a whole lot easier. The three best strategies to use when you are neutral on the direction of the stock and IV rank is high is to trade either a Short Straddle, Short Strangle, or an Iron ButterAly.

Each strategy uses net option selling and takes advantage of a drop in implied volatility as well as an overall neutral move in the underlying stock price. The point here is that they all will accomplish roughly the same goal. My suggestion is to read the "Strategy Description" sections for each of the possible options strategies you are considering in the next section of this book.

Inside I'll outline the best setup and application for each particular options strategy to maximize your probability! And as always, concentrate on the strategies that Ait into your tolerance for risk and trading style. Back to our YHOO example, after reading more details on Short Straddles and Iron ButterAlies you would've learned that they are both aggressive options selling strategies only when IV rank is near the upper end of the range.

Since you may not be comfortable at this point selling naked options, or if you are trading in an IRA account which restricts naked option selling, then the more appropriate and conservative strategy would be to use a Iron ButterAly in this example.

At last, you've completed Step 3 and have the Ultimate Options Strategy chosen! Be honest with me for a second. Doesn't it feel good to have a clear process for Ainding the right options strategy? Sure this book might have a tough read for you as it challenged some deeply held thoughts you've had about the stock market and how traders make money with options. Still, once you go through the steps a couple times, you'll Aind that it's an incredibly efAicient and proAitable way to trading options.

Here Are Your Next Steps The remainder of this book details the top options strategies we use for generating monthly recurring income. The strategies are broken out into different sections based on your underlying assumption bullish, bearish, neutral and implied volatilitys ranking high or low.

From there each strategy offers details instructions on how to setup the trade, optimal timelines, proAit taking levels and risk management tips. Looking for even more amazing video training, downloadable guides or live webinar classes?

Simply head on over to OptionAlpha. They are incredibly useful aids to our discussion of options trading and once you understand how they work, they can help you build out more complex options strategies and analyze possible trade adjustments. Review the graph above before moving forward. After you have purchased an option or a stock, you are considered "long" that security in your trading account.

Short If youve sold an option or a stock without actually owning it, you are then considered to be short that security in your account. Interestingly enough, options trading gives you the opportunity to sell something you dont actually own. But when you do, you may be obligated to do something at a later date such as buy back the option contract to close, hopefully for a lower price, or let the contract expire worthless. Call An option contract that gives the holder the right to buy the underlying security at a speciAied price for a certain, Aixed period of time.

Put An option contract that gives the holder the right to sell the underlying security at a speciAied price for a certain, Aixed period of time. Premium The price a put or call buyer must pay to a put or call seller writer for an option contract.