Options Trading 2.0
Welcome to the Option Alpha technical documentation
What is Options Trading 2.0?
A new approach to options trading based on math, probabilities, backtesting, and automation that transforms it from a complex, stressful, and time-consuming experience into a systematic, math-based methodology that can be automated to run with limited supervision - freeing us to spend more time with family, enjoy life or focus on work.
How is Options Trading 2.0 different?
Today's high-speed computers can do things that were impossible several years ago, like analyze the entire options market and compare every possible combination of legs to find the opportunities with the highest expected value (EV) or premium available. We believe technology like this can help us find better trades, be more consistent, eliminate emotion/bias, and improve our overall results as options traders.
Here are the top reasons we believe Options Trading 2.0 is the next step of progression for options traders:
Leverages modern technology to find the best trades currently available based on math, probabilities, expected value (EV), and backtesting
Provides scanner automations to find and open new positions that match your criteria automatically
Take profits or stop losses automatically using Exit Options and/or automations that monitor positions
Use a bot to turn a systematic trading strategy into a semi-automated machine
Built-in technology like SmartPricing tackles tedious, error-prone challenges faced by options traders
Uses defined-risk strategies to protect us from unpredictable risks
New Ways To Find Trading Opportunities
Option Alpha provides several innovative ways for finding new trades, each tool designed to provide insights for a specific trading opportunity available to options traders...
Finds trades with an edge based on EV and probabilities.
The Trade Ideas backend scans continuously during market hours (9:35 am - 3:55 pm) and finds trade ideas in 3 ways:
Analyzes the top-performing position setups used by all traders in the platform.
Analyzes every option series expiring in 45 days or less that falls on a Friday and matches up every possible combination of legs at common delta values.
It examines all current open positions in the platform that are looking for opportunities
Find and analyze 0DTE and next-day trading opportunities.
It aims to solve the problem of probabilities and expected value (EV) being less accurate for 0DTE trades by providing backtest results to help us identify quality trades instead of relying on probabilities.
Each trade's metrics are backtested against the underlying's previous 1 year of intraday minute data to see how trading a similar position daily would have performed over that time.
Earnings announcements give us a cyclical opportunity to take advantage of inflated volatility. However, finding a trade with good mathematical metrics is challenging since probabilities, EV, and alpha are inaccurate across earnings reports.
Earnings Edge was created to help solve this problem and provide us with a way to make a calculated decision instead of guessing. The trades currently available in the market are backtested across the previous 5 years of earnings reports to provide an actionable list of potential opportunities.
Leverage Automation To Scan For Opportunities All Day
Once you determine the opportunities you want to take advantage of, you can set up a bot to scan all day waiting for your preferred trades to become available and open them automatically.
The bot templates below include a step-by-step video showing how to set up a bot from scratch to find, open, and monitor opportunities automatically:
Cherry picks credit spreads with favorable metrics from Trade Ideas
SPX 0DTE bot based on intraday price "pegging" research located in OA Labs
Simple RSI-based mean reversion strategy + Trade Ideas
Thank you for joining us on this mission!
We believe "the whole is greater than the sum of the parts" and we want you to be a part of the evolution of this platform. To contribute your ideas and feedback, please visit the OA community. We look forward to hearing from you!
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