TSC Options Forum: Developing Resources

Steve:

I loved your "Options Tell the Truth" article. I'm just getting back into trading. Can you recommend any software or services that track option volatility, open interest, etc., that an individual can keep track of daily?

Best regards,

--D.F.

As readers and option traders know, nearly any discussion of options trading and strategies, including the above-referenced article on the predictive nature of options activity, will necessarily include a reference to implied volatility that generates requests for the best places to find such information. In the past I've referred people to such sites as iVolatility and Optionetics, which both provide free data, including lists of stocks displaying high and low implied volatilities relative to their historical averages.

Some sites such as Schaeffer Research and Quote.com's LiveCharts will provide intraday lists of most actives and unusual activity (issues with option volume at least two times the daily average). However, these are typically compiled once a day and released at midday, so you won't find out about events of the last three hours of the trading day. Many online brokerage firms such as OptionsXpress, Ameritrade and most recently Fidelity offer analytic tools for scanning data and testing various strategies.

To identify singular events occurring in a short time period, such as a chunk of calls purchased near the close, you'll need to get more advanced and costly software packages. One of the most popular trading platforms, and the one used by Larry McMillan's firm, is Realtick. McMillan's firm uses Realtick to perform intraday scans, and it also executes trades through its system. Another useful system is esignal.com, which enables you to set up customized scans to flag unusual activity. These services can cost several hundred dollars a month.

But there's still no easy way to avoid good old-fashioned hard work and elbow grease. This means a commitment of time and energy of tracking and crunching a group of stocks. Even with a staff of researchers and access to state-of-the-art software, McMillan still downloads raw data at the end of each day to sift through with his own proprietary methods and screens. It's because of this hard work that he's able to charge thousands of dollars a year for his newsletter and various services, which, for the most part, have provided a great return on investment.