Secret 62SEARCHING FOR THE BEST PLAYS

Trying to find undervalued or overvalued option positions,

or the best spread or best straddle can be a tedious task. What

you need is a good scanning program. The top of the line programs,

such as Optionvue, have good scanning features, but the

web has provided an excellent alternative to software scanning

programs that rely on your computer. Here you do not have the

problem and headaches of downloading data to your computer.

The data is accessed on the web.

Two web based programs that do such scanning are the

Power Analyzer and Option Research Scanner, both available at

options-inc.com. Both of these web-based scanning programs include

volatility charts that were previously discussed. In the future,

many other web-based scanning programs will probably be

available.

Even though scanning for opportunities looks like an easy

process, there is work to be done. Once you get a list of the most

undervalued or overvalued plays, the work begins. In my newsletter,

over 17 years I would run scans before every issue, but that

was the easy part. Sorting through the list of best plays took a lot

of time.

Out of a list of a hundred candidates, finding a few good

plays was difficult. Even with carefully selected criteria, I would

still get a lot of garbage—unfeasible plays. Also, when options are

extremely overvalued or undervalued, you must question why!

Extremely undervalued options are probably on a stock that is involved

in a takeover where the takeover price is preset.

As I indicated previously, options that are extremely overpriced

are probably overpriced for a reason. Find out why! Sometimes

the overpriced nature of these options may predict future

moves in the underlying security or futures. In other words,

someone knows something you do not know. Nevertheless, scanning

is still the best method to finding opportunities that will

give you that statistical advantage in the options markets.

And this is just part of the process of doing your homework!

Trying to find undervalued or overvalued option positions,

or the best spread or best straddle can be a tedious task. What

you need is a good scanning program. The top of the line programs,

such as Optionvue, have good scanning features, but the

web has provided an excellent alternative to software scanning

programs that rely on your computer. Here you do not have the

problem and headaches of downloading data to your computer.

The data is accessed on the web.

Two web based programs that do such scanning are the

Power Analyzer and Option Research Scanner, both available at

options-inc.com. Both of these web-based scanning programs include

volatility charts that were previously discussed. In the future,

many other web-based scanning programs will probably be

available.

Even though scanning for opportunities looks like an easy

process, there is work to be done. Once you get a list of the most

undervalued or overvalued plays, the work begins. In my newsletter,

over 17 years I would run scans before every issue, but that

was the easy part. Sorting through the list of best plays took a lot

of time.

Out of a list of a hundred candidates, finding a few good

plays was difficult. Even with carefully selected criteria, I would

still get a lot of garbage—unfeasible plays. Also, when options are

extremely overvalued or undervalued, you must question why!

Extremely undervalued options are probably on a stock that is involved

in a takeover where the takeover price is preset.

As I indicated previously, options that are extremely overpriced

are probably overpriced for a reason. Find out why! Sometimes

the overpriced nature of these options may predict future

moves in the underlying security or futures. In other words,

someone knows something you do not know. Nevertheless, scanning

is still the best method to finding opportunities that will

give you that statistical advantage in the options markets.

And this is just part of the process of doing your homework!