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Understanding Options Opportunities

Learn how opportunities are identified, scored, and ranked to help you make informed trading decisions.

What Is an Opportunity?

An opportunity is a specific options contract (call or put) that meets your configured risk parameters and has been scored favorably by the platform's quantitative models. Each opportunity represents a potential trade with defined risk, return, and probability metrics.

How Opportunities Are Discovered

The platform uses a multi-stage process to identify opportunities:

  1. Symbol Selection: Scans the options chains for symbols in your watchlist
  2. Data Collection: Fetches real-time pricing, volume, Greeks, and implied volatility
  3. Filtering: Applies your risk parameters (liquidity, max risk, min return, etc.)
  4. Scoring: Calculates composite scores based on multiple factors
  5. Ranking: Sorts opportunities by composite score (highest = best)

Key Metrics Explained

Expected Return

What it is: The projected percentage return if the trade reaches its target price.

How it's calculated: Based on the potential profit relative to the premium paid or capital at risk.

How to interpret:

  • 20%+ Excellent return potential
  • 10-20% Good return potential
  • 5-10% Moderate return potential

Risk Score

What it is: A composite rating from 0-100 representing the overall risk level.

Factors included: Volatility, days to expiration, probability ITM, liquidity, Greeks stability

How to interpret:

  • 0-30 Low risk, conservative
  • 30-60 Moderate risk, balanced
  • 60-100 High risk, aggressive

Composite Score

What it is: The platform's overall ranking metric combining risk-adjusted returns.

How it's calculated: Weighted algorithm considering return, risk, liquidity, Greeks, and probabilities

How to use it: Sort opportunities by this score to see the best risk-adjusted trades first. Higher scores indicate better opportunities.

Liquidity Score

What it is: Measure of how easily you can enter and exit the position.

Based on: Option volume, open interest, and bid-ask spread

Why it matters: High liquidity means tighter spreads and easier execution at fair prices

Understanding the Greeks

Each opportunity includes detailed Greeks metrics. Here's what they mean:

Greek What It Measures How to Use It
Delta (Δ) Price sensitivity to $1 move in underlying stock Delta of 0.50 means option moves $0.50 for every $1 stock move. Higher delta = more directional exposure
Gamma (Γ) Rate of change of delta High gamma means delta changes rapidly. Important for short-term trades near strike price
Theta (Θ) Time decay per day Shows how much value option loses each day. Negative for long positions. Consider when timing entries
Vega (ν) Sensitivity to 1% change in volatility High vega means option price sensitive to volatility changes. Important in volatile markets
Rho (ρ) Sensitivity to 1% interest rate change Usually less significant for short-term trades. More relevant for longer-dated options

Probability Metrics

Probability ITM (In-The-Money)

What it is: The statistical probability that the option will be profitable at expiration.

Based on: Current stock price, strike price, implied volatility, and time to expiration

How to use it:

  • High Probability (60%+): More conservative, likely to be ITM but potentially lower returns
  • Medium Probability (30-60%): Balanced risk/reward, sweet spot for many strategies
  • Low Probability (<30%): Speculative, higher potential returns but less likely to profit

Interpreting Opportunity Quality

Use these guidelines to quickly assess opportunity quality:

Excellent Opportunity
  • Composite Score: 80+
  • Expected Return: 15%+
  • Risk Score: Under 40
  • Liquidity: High volume (200+ contracts)
  • Probability ITM: 35-60% (balanced)
Good Opportunity
  • Composite Score: 60-80
  • Expected Return: 10-15%
  • Risk Score: 40-60
  • Liquidity: Moderate volume (100-200 contracts)
  • Probability ITM: 25-70%
Speculative Opportunity
  • Composite Score: Under 60
  • Risk Score: Over 60
  • Very high expected return (often 25%+) paired with high risk
  • Low probability ITM (under 25%) or very high (over 70%)
  • Consider only if you have high risk tolerance

Calls vs. Puts

The platform identifies both call and put opportunities:

Call Opportunities

Strategy: Profit from upward price movement

Best for: Bullish outlook, trending stocks, positive catalysts

Risk: Limited to premium paid

Put Opportunities

Strategy: Profit from downward price movement

Best for: Bearish outlook, overvalued stocks, hedging

Risk: Limited to premium paid

Time to Expiration

Understanding expiration timing is crucial:

  • 0-7 days: Weekly options, high theta decay, for experienced traders
  • 7-30 days: Near-term options, faster gains but less time to be right
  • 30-60 days: Sweet spot for many strategies, balanced time/decay
  • 60+ days: LEAPS-style, lower theta but requires more capital
Important: Options lose value over time due to theta decay. The closer to expiration, the faster the decay. Consider theta carefully when selecting opportunities, especially for longer holds.

How to Take Action

  1. Review the Dashboard: Start with the highest composite scores
  2. Click "View Details": See comprehensive analysis including charts and Greeks
  3. Verify Fit: Ensure the opportunity matches your risk tolerance and strategy
  4. Add to Watchlist: Track opportunities you're considering before entering
  5. Execute in Your Broker: Place the trade through your brokerage account
  6. Monitor Performance: Track the position in your watchlist

Next Steps