Trade History History: QQQQ Opt History: SPY Opt Simple to Use Trade Example Signal Example

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Before You Subscribe to any Options Trading Service (System)

Before subscribing to any online options trading service, you should evaluate the service fully. Traders must realize that they are solely responsible for their own investment decisions. In some cases, it may be very difficult to evaluate an online options trading system - some services do not even provide a history of their trades (or reveal the signals that triggered the trades).

Below, we list some common questions traders might wish to ask when evaluating an options trading system:

1. What kinds of options signals are generated? Example: For equity options or for options on ETFs?
   
   Traders should know how liquid these options are. Liquidity is important for opening and closing positions;
2. For a given signal, what is the average price of the options and what are the expiration dates? Are the options in-the-money, out-of-the money, or near-the-money?
   
   You need to answer these questions so that you can evaluate how risky the signals are, and how much you should potentially invest in a trade. Out-of-the money options generally carry a higher degree of risk than in-the-money options.
3. How long does the trading system stay in a position once a trade has been initiated in accordance with their signals?
   
   This is a key question. Options' time erosion is the main reason why many options traders lose money. Answering this question will therefore help you evaluate the risk of trading such signals. The less time an options trader stays in a position, the lower the risk the options will lose value due to time erosion;
4. Does the options trading service allow you to auto-trade signals with leading online brokers?
   
   This question is significant, even if you are not going to auto-trade. It is important to that perhaps the signals are not auto-tradable because online brokers cannot open or close positions when following the trading service's signals. Online brokers may refuse to auto-trade signals that are not clear.
5. What is the basis for the signals - how are they generated?
   
   Some online options trading services use "black box" systems. Traders should be wary of these. Would you feel comfortable trading such a system?
6. How are subscribers notified about signal changes?
   
   The answer to this question determines how quickly you will be able to react to a new trading signal. While a majority of options trading services provide email alerts, not all providers also send email alerts to your cellular phone email address.
7. At what time are signals issued?
   
   Traders need to know that they can respond to signals in a timely manner. If signals are issued during trading hours, if the trader has a full-time job, and if and the service does not offer auto-trading, a timely response to trading signals may not be possible.
8. What signal parameters are used? Were they designed for market orders or for limit orders?
   
   Many options trading services are designed to execute trades at market prices (i.e., making use of market orders rather than limit orders). With such systems, it is common to see that the system will enter a position at a price that differs from the prices available to those traders who follow the signals. In some cases, this could lead to the system showing a winning trade while traders actually lose money. When assessing a trading system, make sure you are able to open / close positions at the same price as the options trading system;
9. Does the system use stop-losses?
   
   Understand that if an options trading system does not use stop-losses; you could see trades where you may lose all the money invested in a particular option. You should be comfortable with this fact. Also understand that options trading is not the same as stock trading;
10. What is the system's performance?
    
    A trader should be able to review a system's trade history. If one is not available, ask WHY. If a trade history is hard to find or represented in a way that makes it hard to evaluate objectively (i.e., difficult to see winning and losing trades), also enquire WHY;
11. Are options signals monitored by an independent third party (such as http://www.pro-option-profits.com/)?
    
    Traders should know whether they can trust the result represented for an options trading system. If a service is not being monitored, the logical question is to ask WHY.

You may have other questions ďż˝ do not hesitate to ask them! You should feel confident about the online options trading service you use. Whatever system you chose, it should never conflict with your personal risk tolerance and trading style.

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