Welcome to Data Driven Options Trading! What makes it data driven? Data driven trading is based on statistics, probabilities, and mechanical management processes. We avoid trading on emotion, hunches, or hot tips. This site is dedicated to providing helpful resources for traders who want to trade options with the highest probability of success. Through the study of historical data, pricing models, evaluation of real life instantaneous prices, and analysis of readily available variables derived from option prices, data can help point to strategies that are more likely to succeed.
Options can be used in many ways. They can be set up to reduce volatility of a stock position. They can be used as a substitute for stock. They can be used for pure speculation. Each use has some data driven options trading setups that perform better than others. The goal of this site is to teach traders how to find the best performing setups for any given strategy using data.
Most of the approaches discussed in this site favor selling options to collect premium vs buying for speculation. Time decay can then work to the advantage of the trader. Another component of emphasis is taking advantage of the fact that market volatility often quickly reverts from periods of high volatility to low volatility and to a lesser degree eventually rises from low levels to high levels. These two components of options- time and volatility, are easier to predict than future price movement.
This site is broken into many areas of content. You can learn about the basics of pricing and how past events and expected future events impact the price of options. You can learn about the Greek parameters of options tables and portfolios, and how they relate to the three primary drivers of option prices: price movement, time, and implied volatility. You can learn about option selling strategies. You can learn how to manage a trade from entry through closing, both for winning trades and losers. Most of all, you’ll learn about risk, and how to define and manage it.
As time has gone by, the site has been expanded to cover strategies for all levels of risk, and contrast the differences. On one extreme are covered option strategies, which are ways to reduce volatility and risk compared to owning stock while attempting to have a similar level of return. On the other extreme are selling naked options on futures contracts, a highly leveraged way to maximize potential returns. And then there are many option strategies in between. Understanding how brokers allow different levels of permission for different levels of risk can help traders find the level of trades that best fit their objectives. Knowing how margin usage can magnify returns or magnify losses is key to managing risk. And understanding the different types of underlying securities with options to trade allows traders to select strategies and underlying securities that work best together.
Most websites that share information about option trading are trying to sell some premium service or premium training program. There is no hidden agenda on this site or any business affiliation with other providers. The site is simply to share information about option trading. The goal is for readers to become knowledgeable enough that they can make their own data driven option trading decisions without help from paid services.
The vision of this site is to share significant amounts of information about option trading that users will find valuable. The consistent theme is highlighting the concept of data driven options trading. We continue to add and update content. To see the latest additions at any time, check out the Change Log post, which lists the changes to the site, updated after every significant addition or re-write.
On the site, there is access to some live stock data. The focus is on securities that make good underlying assets for options or are indicators that are often used to assess the state of the market. If you are needing real-time data for trades, a feed from your broker will likely be much more up to date. But, for casual information gathering, this data provides quick views for reference while digging in on other concepts. The data provided comes from third party data suppliers which have no affiliation with the creator of this site.
A word of caution. No matter how informed a trader is, or how much data is analyzed, options are risky. They are derived from underlying securities that are risky. You should be familiar with the risks involved before trading options. You need to understand how different the risks are for different types of option trades. Nothing on this site is intended to provide specific trading advice or recommendations. There are no guarantees for success. You must always weigh the potential risk before entering a trade, and make decisions balancing those risks with the potential profit.
From analytics, it is easy to see that the most popular pages on this site are for trading strategies, especially unique options strategies. But the pages on comparing risk, managing trades, managing portfolios, understanding the math of Greeks, and all the other base knowledge are written to be a source of information that can’t be found elsewhere. It’s not about defining all these concepts, but learning to understand why each concept is useful and important to making data based options trading decisions. Sometimes you need to eat your vegetables before you eat your dessert.
Please provide feedback via the comment sections of the site or reach out over Twitter to @DataDrvnOptions. This site uses filters to try and keep spam and other nonsense out of comments. Please keep comments focused on topic. Reader comments and questions are very helpful to other readers, and I try to respond with data driven responses.
This site gets visitors three ways. Some people find us from a search engine. Others are loyal readers who come back periodically to read more or look for new insights on what they already read here- I really appreciate return readers. And we are getting a growing number of visitors who find out from friends and colleagues on social media sites who have shared links to their favorite pages on this site. Many thanks to those who are sharing this data driven options trading site with others.
If you find this site helpful, please feel encouraged to share your favorite pages of this site on your favorite social media platforms- I’ve added “share” buttons on the top right of desktop pages that allow readers to click and post to several different sites- just add your own comment to the link that appears and post. The site grows by word of mouth, sharing, and people finding us on search engines. Sharing drives the most growth.
