Winning at options trading in Australia is difficult due to shonky educators, high commissions, increasing clearing house fees , low liquidity, relaxed market maker obligations and high bid/ask spreads. The commission drag alone for frequent traders can be tens of thousands of dollars over 5-10 years. The odds are truly stacked against us!
But the greatest hurdle to winning with option trading is the dearth of good quality trading data and information . The US options market has broker and 3rd party services that help traders find, analyse and manage profitable trades. With the exception of the large insto’s that can afford fulltime quant’s and a team of programmers, retail traders of Australian options are not so lucky and resort to cut and pasting into cobbled together spreadsheets or worse – trade without this important information.
If it’s so damn hard, why trade options in Australia? We could use another of the plethora of derivates available to Australian traders such CFD’s, ASX mini’s or barrier warrants? Option strategies offer many unique opportunites due to their flexibility and adaptable risk characteristics. Options continue to be important hedging, income producing and speculating derivatives for institutions, professional & retail traders and SMSF trustees alike. Successful traders need reliable risk measures to be able to manage risk profiles and achieve our trading goals.
To stay in the game, Australian option traders need to maximise their cumulative trading edge by thoroughly understanding option pricing, position risk (the ‘greeks’) and volatility behaviour. Good option trading tools and resources can improve your option trading performance by:
- Providing you the option trader’s edge of knowing historical volatility and where implied volatility is and where it may go.
- Find historically cheap and expensive options using the implied volatility percentile method.
- Gauge market sentiment at a glance with implied volatility and Put Call ratio charts.
- Screen covered call, written put, vertical & calendar spreads, straddle and butterfly rankings for trade opportunities.
- Drill down further by sorting & filtering to individual own criteria.
- Identify the stocks with the largest volatility skews to identify spread trades with positive edge
- Check seasonal volatility charts to help find potential implied volatility and crushes.
- Identify unusual option volume and implied volatility spikes that often precede significant share price movements.
Volatility Tracker is an online service dedicated to providing option traders with access to a suite of directional and volatility trading tools essential to sustainable option trading success. It is the only site that provides advanced measures of implied volatility, implied volatility percentile, historical volatility, advanced option trade scanning and ranking and other volatility analysis and trading tools.