OPTIONS CZAR HELP - STRATEGY MAKER
| One of the most important features in Options Czar is the ability to recommend an options strategy (combination of options and stock operations) based on the user's predicted underlying asset behaviour. In other words, there is an optimal strategy for when the asset price increases, for when the asset price drops and even for when the asset price remains the same. The Strategy Maker accepts as input the amount of cash the investor is willing to spend and the type of success criteria that he/she will use (maximize profits, minimize risk or obtain the best average profits). |
| The following example shows how this is done. We first take any asset either from the Asset table list (in case we're using End-Of-Day data) or pull the asset data from the CBOE web page (in case we're using free data) and load it's data onto the options chain table. |
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| Once we have done this, we can go to the Time Chart and choose "Strategy Maker" from the Tools menu. We can also choose "Strategy Maker" from any place in the application and it will take us to the Time Chart tab. We can see that to the left a small section has appeared with a pull-down menu, a place to add the amount of cash we will invest and the button to get everything moving. |
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| In this example, we look at the historical data and make a wild guess that the stock price will bump back up by July 22nd, which happens to be the expiration date in July. Therefore, we click on a chart and a blue point will appear. Seconds later, a line that joins the current price with the blue point appears, too. |
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| Now that we have defined our predicted trend, we decide that we want to choose the option strategies that maximize the profits at any given point in time. We also decide to invest $2500 on these strategies. Please note that we have previously defined a maximum loss of US$1000 in the first tab of the preferences window. Statistically speaking, within a plus/minus variation of 2 times the volatility of the stock price (which covers 95.44% of the probable prices), the chosen strategy will not allow us to lose more than $1000. |
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| Once we click on the "Calculate" button, we will see that the application starts thinking. After it finishes thinking (actually it was calculating), it delivers a list of the best option strategies in a new pull-down menu and selects the first one for us. Please note that the more options a chain has, the longer this calculation will take. Please note that the Strategy Maker uses the Exercise Profits and Losses for calculating. A future Options Czar version will use both. |
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Every time we select a new strategy from the menu, it will show up in the Time Chart. In short, Options Czar allows you to design options strategies based on:
- The underlying asset (stock or index) of your preference.
- The amount of cash that you'll want to invest.
- The maximum amount of cash that you're willing to lose.
- The type of success criteria.
- Your expectation for the underlying asset in the next months.
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