Scalping Options

Scalping Options


Scalping Options

We recently caught up with Maria, one of our more experienced Traders. Maria has been trading for 15 years, and here’s a brief overview of what she had to say about her strategy for scalping options…

I’m excited to be here today and show you guys how I use the BlackBox platform.  I want to start by going over my morning routine. So, first thing in the morning, what I like to do is click on the pre-market scanner.  The BlackBox system is designed for you to just click from left to right and every one of the buttons has very important data. So, I go through the pre-market scanner and I get an idea of what tickers are moving. I can see their volumes and what percentage they’re up.

After identifying what’s moving, I go to the news section, and for me as an options scalper, finding trades that have momentum relies a lot on news. So, what I like to do is scroll through and get a feel of what’s going on in the market overall on a very broad level. Is there anything that’s market-moving that can push the entire market one way or the other, or not?  Then what I’ll do is filter the news stream. You can filter the news stream two ways, by rating or by options news. So, in the morning, I’ll click on the ratings filter and everything that I see is only upgrades, downgrades, price target changes. It’s only analyst actions and then I can go through and see if anything is strong enough for me to trade. When you click on the news article, it will open up a separate box and it will give you information on what the analyst says. The analyst news helps me determine whether or not the action has enough weight to move the ticker. So, when I’m scalping options, or I’m looking for an options trade that’s super important. I don’t want to jump in without getting at least a couple of candles out of the trade, if not more.  First, I have to determine how much weight I can give to what the analyst is saying.

Day Trading Options

Intraday, what I like to do is unclick the ratings filter and click on the options news filter. This gives me just information regarding options. So oftentimes you’ll see that there’s options flow coming in on certain tickers that our news stream will pick up. Another thing you can do is leave both options news and ratings selected, that way throughout the day what you’re looking at is only news related to options and ratings.

So, first thing in the morning, that’s how I start off. I’m getting all my upgrades and downgrades. I’m looking at that premarket scanner. Another cool thing that you can do is you can click on the ticker right from the pre-market scanner. It’s going to pull up the chart over in the left-hand side and then I can click on the news button in the bottom right corner, and now my stream is filtered. It’s a really quick and simple way to get everything all at once.  Which as a trader that’s what you need, you need speed, and BlackBox’s set up is built for quick access to real-time trading analytics.

One thing I want to point out is that there are actually three sides to BlackBox.  One is the NASDAQ, New York Stock Exchange and all these stocks are filterable. So, if I only want to see stocks over $50, or over five dollars, I can set that and everything that I see in the alert log is only going to be specific to stocks over whatever threshold I’ve selected.  I typically leave it on all stocks because I want to see everything.  Real-time stock charts are built into all three sections of BlackBox. I really like them a lot, you can select from numerous chart studies and save multiple views. So, let’s say I wanted to put on a moving average, VWAP for example.  I can add VWAP and I can select views, save view, and I can give it a name then save. Now if I refresh the page, go to any ticker, click on views and now VWAP is there. So that’s actually a really nice customizable feature. I have my own personalized settings that I like to use with all my studies already saved. I will turn that on when I load a ticker first thing in the morning.  Another cool thing about the charts is that you can simply click the expand button on the top left of the cart and make the charts much larger. A lot of people don’t know that they can enlarge the charts. It’s great if you want to keep looking at the alert log or news throughout the day and want a bigger chart.

Finding Trades for Scalping Options

The top ten gainers area is an awesome section to find trades. I often find a lot of my options scalping trade ideas using the top ten gainers. BlackBox top 10 gainers derive from the stock alerts that you see alerting throughout the day. This is what I like to call the cream of the crop, the top ten gainers consist of the best from the alerts for the day.  And you will often find a lot of really great movers in the top ten gainers list.  BIIB was a great example, BlackBox alerted to BIIB right after it halted. They were doing a presentation on one of their drugs. So, it was halted and unhalted. The stock alert came in at $281 and it hit a high. I think it’s $310 or $309ish, somewhere in that area. That was a beautiful, beautiful stock alert.

So, we see the stock alert as it comes in, it is then accessible in the alert log area, and the best of the best make it into the top 10 gainers. So, I constantly check this area throughout the day, especially when I’m trying to find trades for option scalping whether to the upside or downside. BlackBox also displays the top decliners, which is great for scalping options to the downside. I definitely recommend frequently checking the top 10 gainers section as part of your options strategy.

Tools for Scalping Options

Another great BlackBox feature to use throughout the day is the market scanner.  Previously we discussed using the pre-market scanner before the market opens. During the day, you can click on the market scanner to see which tickers are moving, either upwards or downwards. So, we have gainers and decliners throughout the scanner results. This is another place that you can find opportunities for options scalping. These are not necessarily alerted, essentially these are just tickers that are the top price and volume leaders.

The volume ratio scanner is probably one of my favorites. This is a great tool especially for momentum traders, people that are looking to scalp options based on the momentum coming into a ticker.  The information provided is the volume and the ratio of how many times the 10-day volume the ticker is trading.

The chat feature is a great place to get confirmation for specific stock or options alert. What I like to tell people is if you see an alert and you have a question about it, you can ask using chat or just look at the chat stream to see if people are already talking about the alert. The more people that are talking about it, the more likely that the options trading room is playing that alert too.

After hours, the post market scanner is amazing. During intraday, the post market scanner is blank, it’s only going to show you volume after hours from when the market closes.  Any volume that you see in the post market scanner is specific to post market volume.  This to me is critical, there’s not a single scanner out there that I know of that’s going to give you volume that specific afterhours.  Most of the time you’ll get a cumulative of afterhours and intraday volume.  BlackBoxStocks post market scanner displays only the afterhours volume, which is amazing.

Scalping Options with BlackBoxStocks Trading Software

The other part of our platform, which is the part that I tend to focus on a lot, is the options module. I love options flow, it is an excellent way to find some really, really, great options scalps.  As an options scalper, options flow gives me that extra confidence to know that I’m following smart money. BlackBox also provides algo generated options alerts that can be found in this section. For an options scalper, this is gold. I cannot tell you how much or how valuable the options portion is to me.  The options flow itself is customizable using a variety of different filters. What I like to do is unselect the above ask only and at or above ask filters because I want to see all of the options flow. With these custom filter settings, I’m getting all the transactions that come through. For example, If I want to see what’s going on with Apple, I can filter the options flow down to just Apple, and then I can click on the heat map, which is another unique feature of BlackBoxStocks.

The heat map is going to give you a quick and easy way to see if the options market is leaning bullish or bearish, or if there’s a lot of volume concentrated one side or the other. It’s set up like an options chain. Apple options flow can be hard to read because there’s a lot of flow on Apple.  The BlackBox heat map is an awesome way to narrow down the options flow of a specific ticker into a visual representation that makes it easier to understand.  What’s great is that these cells are color coded. So really all you have to pay attention to is the background color of the cell. If it’s green, that means its bullish activity. If it’s red, it means its bearish activity. So, the heat map is definitely one of my favorites.

Another thing that you can do with the options flow is review the historical data, which is amazing! For example, if I want to see what happened yesterday on Amazon, if there’s any significant options flow there, I can type in the date and look up the historical data. There’s also a download feature. If I wanted to go through and download the historical data, I can download to an Excel spread sheet, and I can personally track it there.

BlackBox provides an OI (open interest) tab, which is awesome as well. They also have a tab for volume, which is another a great feature. It will give you daily changes for OI, which is great. Especially if you’re in longer-term plays and you want to keep track of when people are entering or exiting positions.  Another section of tools that I use for scalping options is the “most active calls,” “most active puts,” “bullish flow,” and “bearish flow” tabs. When you click on any of these, they will display how many transactions have come through and the total notional value for each category.


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