The Download Now link will prompt a local download of the Firefox extension. To install the extension directly, open the file using your Firefox browser.
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All of these strategies are some of the best strategies that you can find in the Binary Options market. KAZi created the Binary ALPHA Strategies by analyzing the swing patterns of currency charts and developed logical rules to apply during every trade.
The problem with opening PDF files in Firefox is that it tends to slow down your performance, especially if you open several of them. This simple little extension gives you complete control over PDF files in a Toolbar button.
Rather than stick you all alone with a browser-jarring PDF file, the PDF Download extension provides you the option to: download the file locally, open it with Firefox using the PDF download options settings, view the PDF as an HTML file in the browser, bypass PDF Download, or cancel the link. The first two options are self-explanatory, while the 'view as HTML' feature works a bit like Google's version of the feature, speeding load times while largely abandoning formatting. The dialog box also displays the size of the target PDF file, which can help in deciding which option to choose.
The latest updates adds one incredible feature, in addition to the bug fixes. Users can now convert the Web page they're looking at into a PDF, complete with hyperlinks. It doesn't like pages with embedded content, changing Flash videos, for example, into links back to Adobe. But even with that limitation, the former Web page looks fine in as a PDF. The plug-in now supports Firefox 3 and its social networking branch, Flock. PDF Download isn't fancy for an extension that bills itself as 'one of the most popular Firefox add-ons ever,' but it could be a big help for journalists, government workers, and others who spend considerable time with PDFs.
What do you need to know about free software?
- How Options Trading is Different
- Bollinger Bands
- Money Flow Index (MFI)
- Open Interest (OI)
There are hundreds of technical indicators traders can utilize depending on their trading style and the type of security to be traded. This article focuses on a few important technical indicators popular among option traders. (If you are not sure whether technical trading or options are for you, check out our Introduction to Stock Trader Types tutorial to decide your preferred style. Also, please note that this article assumes familiarity with options terminology and calculations involved in technical indicators.)
How Options Trading is Different
Technical indicators are often used in short-term trading to help the trader determine:
- Range of movement (how much?)
- Direction of the move (which way?)
- Duration of the move (how long?)
Since options are subject to time decay, the holding period takes significance. A stock trader can hold a position indefinitely, while an options trader is constrained by the limited duration defined by the option's expiration date. Given the time constraints, momentum indicators, which tend to identify overbought and oversold levels, are popular among option traders.
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Let's look at a few common indicators—momentum and others—used by option traders.
Key Takeaways
- RSI values range from 0 to100. Values above 70 generally indicate overbought levels, and a value below 30 indicates oversold levels.
- A price move outside of the Bollinger bands can signal a security is ripe for a reversal, and option traders can position themselves accordingly.
- Intraday momentum index combines the concepts of intraday candlesticks and RSI, providing a suitable range (similar to RSI) for intraday trading by indicating overbought and oversold levels.
- A money flow index reading over 80 indicates that a security is overbought; a reading below 20 indicates that the security is oversold.
- The put-call ratio measures trading volume in put options versus call options; changes in its value indicate a change in overall market sentiment.
- Open interest provides indications about the strength of a particular trend.
Relative Strength Index (RSI)
The relative strength index is a momentum indicator that compares the magnitude of recent gains to recent losses over a specified period of time to measure a security's speed and change of price movements in an attempt to determine overbought and oversold conditions. RSI values range from 0-100, with a value above 70 generally considered to indicate overbought levels, and a value below 30 indicating oversold levels.
RSI works best for options on individual stocks, as opposed to indexes, as stocks demonstrate overbought and oversold conditions more frequently than indexes. Options on highly liquid, high-beta stocks make the best candidates for short-term trading based on RSI.
Bollinger Bands
All option traders are aware of the importance of volatility, and Bollinger bands are a popular way to measure volatility. The bands expand as volatility increases and contract as volatility decreases. The closer the price moves to the upper band, the more overbought the security may be, and the closer the price moves to the lower band, the more oversold it may be.
A price move outside of the bands can signal the security is ripe for a reversal, and option traders can position themselves accordingly. For instance, after a breakout above the top band, the trader may initiate a long put or a short call position. Conversely, a breakout below the lower band may represent an opportunity to use a long call or short put strategy.
Also, in general, keep in mind that it often makes sense to sell options in periods of high volatility, when option prices are elevated, and buy options in periods of low volatility, when options are cheaper.
Intraday Momentum Index (IMI)
The Intraday Momentum Index is a good technical indicator for high-frequency option traders looking to bet on intraday moves. It combines the concepts of intraday candlesticks and RSI, thereby providing a suitable range (similar to RSI) for intraday trading by indicating overbought and oversold levels. Using IMI, an options trader may be able to spot potential opportunities to initiate a bullish trade in an uptrending market at an intraday correction, or initiate a bearish trade in a down-trending market at an intraday price bump. (Note that it is important to be aware of the “trendiness” of the price moves. When there is a strong visible uptrend or downtrend, momentum indicators will frequently show overbought/oversold readings.)
To calculate the IMI, the sum of up days is divided by the sum of up days plus the sum of down days, or ISup ÷ (ISup + IS down), which is then multiplied by 100. While the trader can choose the number of days to look at, 14 days is the most common time frame. Like RSI, if the resulting number is greater than 70, the stock is considered overbought. And if the resulting number is less than 30, the stock is considered oversold.
Money Flow Index (MFI)
The Money Flow Index is a momentum indicator that combines price and volume data. It is also known as volume-weighted RSI. The MFI indicator measures the inflow and outflow of money into a security over a specific period of time (typically 14 days), and is an indicator of 'trading pressure.' A reading over 80 indicates that a security is overbought, while a reading below 20 indicates that the security is oversold.
Due to dependency on volume data, MFI is better suited to stock-based options trading (as opposed to index-based) and longer-duration trades. When the MFI moves in the opposite direction as the stock price, this can be a leading indicator of a trend change.
Put-Call Ratio (PCR) Indicator
The put-call ratio measures trading volume in put options versus call options. Instead of the absolute value of the put-call ratio, the changes in its value indicate a change in overall market sentiment.
When there are more puts than calls, the ratio is above 1, indicating bearishness. When call volume is higher than put volume, the ratio is less than 1, indicating bullishness. However, traders also view the put-call ratio as a contrarian indicator.
Open Interest (OI)
Open interest indicates the open or unsettled contracts in options. OI does not necessarily indicate a specific uptrend or downtrend, but it does provide indications about the strength of a particular trend. Increasing open interest indicates new capital inflow and, hence, the sustainability of the existing trend, while declining OI indicates a weakening trend.
For option traders looking to benefit from short-term price moves and trends, consider the following:
Option Alpha Signals Book Review
The Bottom Line
Option Alpha Signals Review
In addition to the above-mentioned technical indicators, there are hundreds of other indicators that can be used for trading options (like stochastic oscillators, average true range, and cumulative tick). On top of those, variations exist with smoothing techniques on resultant values, averaging principals and combinations of various indicators. An options trader should select the indicators best suited to his or her trading style and strategy, after carefully examining the mathematical dependencies and calculations.