Integrated Options and  
  Elliott Wave
  Option Trading  

Option trading software is usually designed for analyzing options only. The problem with this, of course, is that some traders use technical analysis to determine where a market is likely to go. So, with option trading, they find themselves having to purchase more than one piece of software to accommodate their trading style. However, IntrepidTrader combines sophisticated technical analysis techniques, such as the Elliott Wave theory, with option trading analytics to allow traders to easily find trading opportunities without the time consuming and cumbersome effort of using two different pieces of software.

An Option Trading Example

In preparation for finding a trade, we set up our portfolio of securities in the Quotes window. Figure 1 shows an example of a listing of stocks and we are interested in scanning.

  Option Trading  

Figure 1

After the portfolio is created, we simply open the IntrepidTrader Scan window.  This window helps us establish the criteria that we want to scan for in the portfolio above.  In this option trading example, we are going to search for a Elliott Wave four formation and a Bear Call option spread for use in our option trading. This is easily done by selecting "Wave 4” and then selecting the "Bear Call" spread from the box below as shown in Figure 2. Then, we are ready to look for option trading opportunities, we initiate the search by pressing the "Scan" button.


Option Trading Software


Figure 2

The "Scan Results" portion of the scanner window will show which securities met the criteria specified in our scan.  These results are shown in Figure 3.

  Figure 3  

Figure 4

Selecting a spread from the Options tab in the Results section of the Scanner window will open the Option Worksheet as shown in Figure 4.  This window is used to provide further option trading analysis for the spread.  It shows the spreads profit and loss graph as well as the related delta, gamma, theta, vega and implied volatility for each leg of the spread.  Here you can change the “Chart as of” or “Changes in IV” values found to the side of the chart to see how the passage of time and fluctuations in implied volatility will affect the spread. As you might imagine, in option trading, this type of analysis and information is very important.


Figure 5

Those interested in option trading may also want to look at the chart related to this option spread to time our entry. In Figure 5, we can see a price chart for the security that relates to the option spread that we were just looking at.  As you can see, the price target  projected by IntrepidTrader catches the end of this Elliott Wave four correction. At this point, we want to use the gold boxes drawn around recent price action to enter this market.  So, as prices break out of the box to the down side, we may want to enter our option spread shown in Figure 4.  Also, we may want to exit our position if the market moves above the top of the box. Naturally, this example allows you to easily see the advantages you would have over others by combining Elliott Wave and option trading analysis.

IntrepidTrader combines the precision of Elliott Wave analysis with the powerful leverage found in option trading. And as you can see, it even helps you determine your risk / reward and probability of profit of the option spread before the trade is entered. Realizing that all of this analysis was done by clicking one button may cause you to understand that powerful and effective trading tools can save you time and boost your profits. And as you imagine what this could be like for you, you may find yourself wanting to see IntrepidTrader in action.

  Copyright 2008 Trading Synergy, Inc.
All rights reserved.