How to Use an Option Screener to Identify Profitable Opportunities?
Every option trader can relate to the struggle of finding the next trading idea. Identifying a profitable opportunity plays a vital role in the success of your option trades. One powerful tool that can help in your quest for trading ideas is an option screener.
An option screener is a tool that helps you filter through the vast number of options available in the market and find those that meet your specific criteria. But how to use it to identify your next trade? Let’s find out.
How to Use an Option Screener to Identify Profitable Opportunities?
You can find screeners on web trading platforms or the best app for options trading. Once you find it, here is how to spot profitable trading opportunities with a screener:
1. Scan Options in Real-Time
Tracking and analysing the entire market every day can be a huge challenge. Option screeners provide real-time market data that is updated daily for all technical indicators and option contracts. Thus, just by observing the screener, you can find option contracts of your interest. Look for assets that are showing an uptrend or downtrend, so you can decide which direction you want to choose.
2. Use Technical Indicators
Technical indicators can help you narrow down your search. You can filter the market based on volume to see which option contracts are being traded the most. You can also scan the market for options that are showing substantial price gains or losses. Lastly, you can filter the options for open interest to see which options’ outstanding contracts are surging or lagging to make an informed choice.
3. Apply Option Greeks
Option greeks such as Delta, Gamma, Theta etc. are sets of metrics that measure different aspects of an option’s price behaviour, such as sensitivity to changes in the underlying asset’s price, volatility, and time decay. These metrics can help you spot potential trading opportunities that suit your criteria.
4. Access Option Chain
The best part of a screener is that you can use it in conjunction with other tools to find profitable opportunities. Dhan provides seamless access to the option chain right from the screener, thus enabling you to check all available option contracts for a particular asset and identify one with trading potential.
5. Go through Pre-Built Strategies
Once you find an option contract that meets your specific criteria, go through the list of pre-built strategies and find the best one to maximize your returns. Some online trading platforms provide a large collection of strategies you can apply to your trades in a few clicks. Thus, option screeners can not only help you identify opportunities but also enable you to trade profitably.
Conclusion
Option screener can be used to track the market for option contracts that meet your specific criteria and helps in the identification of profitable trading opportunities. You can access screeners from online trading platforms or the best app for options trading. The screener allows using a variety of indicators and tools that can help you find your next trading idea.
