Anyone reading this should take the notes with a grain of salt. I’m just documenting a few useful things to understand the stocks. But being able to reason the data does not give one the power to predict market, it only makes one feel more comfortable making choices.
- This GamestonkTermial page lists a lot useful sources.
Trade what you see, not what you think. Avoid confirmation bias.
TODO: 1. Catagorize by purposes. 2. also think about when to which ones. 3. what each indicator can tell you.
- Moving Average (MA)
- Simple Moving Average (SMA)
- Exponential Moving Average (EMA)
Option is risky.
Option contract has value. It is a different market. It goes up or down more dramatically than the normal stock price: several parameters (e.g., IV, greeks) will amplify the change.
One thing I realize after playing with options is that people do not really wait to close the position (i.e., wait until the expiry date). They might sell the option contract before the expiry date. They might make more profit (also loss more) than just trading stocks.
It takes a seller and a buyer to complete a transction. For some low liquid stock/option, you might not be able to find a buyer. You must pay attention to this if you are betting able to re-sell the options.
Market maker (MM) will sell whatever ridiculous options. But they will in turn use option/stock to hedge, which in turn create some volality in the stock market.
Some useful tips:
- Look for high VOL/OI ratio (maybe larger than 5?)
- The bid/ask spread should be small. Smaller the better. It also means more volumn.
- Pay attention to IV. Many people suggest IV < 100%
- Pay attention to the strike price and date. I haven’t fully grasp the core idea. Yet to learn.
- Mon/Fri close/mornings options somehow have higher average max return.
Before futures open, here's something neat.— unusual_whales (@unusual_whales) January 10, 2021
Take a look at this chart, it shows the average max return from 2020 and breaks it down to time and week day, and the option type from the whale.
You can see that Friday after 12pm EST, Monday Morning, and Monday close have the … pic.twitter.com/QRSIstpqsx
- Whale Winner and Loser MEGA Report
Read more tactics here: https://unusualwhales.com/spears.
I’m mostly using TradingView, half an hour is enough to learn the basics. I highly recommend it if you also know a bit programming. It allows you to express things in Python.
I sometimes check https://unusualwhales.com/ for unusual options, which maybe potential insider tradings.
I also use https://finviz.com/.
Last but not least, Reddit, of course :)
This topic is really interesting. I may able to document more later.