Member Guide & FAQ

What is the Market Blitz?

Our daily morning note sent every trading day at 7:45 AM. It contains everything you need to get prepared for the trading day ahead including a curated recap of what’s moving markets, International activity including relevant earnings, stock-specific news, full media breakdown of both macro and micro stories, analyst notes, insider activity and more. It also includes calendars of events.

What is the Market Recap?

The Market Recap report is sent every trading day via email at 3:45 PM and includes a full breakdown of the day’s notable options flows by sector. It also includes 4-5 focus pieces called “Option Radars” which are in-depth looks at specific high-impact or unusual trades with potential strategies. Our option radar focus pieces will often look at areas where there has been repeat flows looking out on a 3- to 6-month timeframe. The recap also includes any opening and closing trades in the mock portfolio (MAX members get alerts in real-time).

What is the Weekly Radar?

Our weekend note sent every Sunday morning before 10 AM and packed with everything needed to get ready for the week ahead. It includes a detailed look at S&P technicals and important levels to watch, market sentiment, the most detailed calendar on the Street with impactful events both in the US and Internationally, technical scans, notable open interest and more. In addition, we feature a number of unique research pieces focusing on insider buying, earnings previews, and small-cap deep dives. The weekly radar also includes two trade ideas based off of current open interest.

What is the Monthly Market Brief?

A special report sent around the 1^st of the month to members that features a number of unique, longer-form research pieces not necessarily tied to the day-to-day flows but instead looking to catch the next big move. It includes a detailed technical breakdown for the month and longer timeframe outlook including key levels as well as fundamental valuation bands. In addition, it features macro catalysts to watch and a longer-form market sentiment check. In terms of stock-specific information, we feature leading bull/bear flows in an easy-to-read table, 4-5 notable technical setups from quality names, highlight 3-4 ‘radars’ from the month that are setting up well, earnings recap for the month, a deep-dive into thematic trends and the best stocks to play them, a look at a recent M&A deal and potential sympathy plays, small-cap feature, International stock of the month, IPO previews, insider breakdown, and more.

Do you do any other special reports?

Yes, during the year we’ll tackle a number of other longer-form reports. Around June/July, we typically do a 75-100 page dive into the biggest open interest positions for the second half of the year (our “2H OI Report”). We also do a massive 400-500 page preview for the year out around New Year’s Day. Others not on a regular schedule include special circumstances such as the recent bear market where we featured 10 small-cap values, a detailed put sale strategy and potential portfolio, and top fundamental names to target. We’ll also do additional theme write-ups, biotech event previews, and more. All of these are available free to members.

Trading Hub Overview

The Trading Hub is packed with actionable trading ideas every day as I highlight Technical Patterns, Market Moving News, Unusual and Institutional Options Flow, and more each day. Everything is tradable depending on each individuals trading style and risk profile. Throughout the day I will highlight trades in Blue Font as trades that are added to the Options Hawk Mock Portfolio, for educational tracking purposes. Spotlight Trades are sent via email, twice per week, and subject to the entry price noted in the report, so no need to post live in the chat, but take into account the “tape” when entering for the best entry points. Spotlight Trades will not always fill due to market gap opens, and stay as open orders for a week, unless targeting a specific catalyst that passes. Also, there are plenty of opportunities to “scalp” options intraday based on the flow analysis provided and it is impossible for me to list every trade each day, so the Portfolio is more for the swing trades. I suggest that members do not “blindly” follow all the trades and are selective, also willing to take trades not added to the portfolio. The traders that perform the best at Options Hawk utilize the information and analysis provided to make trades daily, using his/her current trading style to determine the trades that align with your trading views on a particular stock. Options Hawk should be seen as an idea-generation platform, NOT a trade recommendation service, and I provide all the insight needed to make better trading decisions, whether via the Market Blitz in the morning, or the daily note on key Technical break-out alerts, options flow, and fundamental analysis. Each trader must take responsibility for his/her trades and it is not possible for me to know each person’s reward/risk profiles, so I provide targets/stops based on my trading style, but this may differ with yours and it is important to take that into account when deciding to enter/exit trades taken. Please feel free to contribute to the Trading Hub with market related content as it is beneficial to the group, and I want to create the best platform for traders, and team-work is essential.

Important: Do Not Copy and Share Content from the Member-Only Page.  I provide original content and spend a lot of time doing research, and passing along this information to others for free is a violation of your subscriber agreement and will result in termination without refund.  Keeping this content exclusive to members gives it much more value.

Video Discussing Product Features:

A few projects down the road that will take some time to implement include:

1) Dedicated pages for 1000 top optionable stocks with option statistics updating live, volume and OI graphics, and include any recent mentions of Options Action and other content in the chat room. This is going to take some time as I need to get certain licenses, exchange feeds, and an advanced programmer to put the full idea to work, but I have a great vision that should make this a very valuable source of info.

2) User Portolios – Allow for users to keep portfolios of up to 50 stocks that will then alert them via text, email, or other format any time there is a mention in the live trading chat.

3) Hawk Option Scanner and Database Improvements – We are working on developing an automated options scanner with advanced logic, and building out the historical database of notable option trades. This will include pre-set filters and custom scans I create with a front-end user interface. I also plan on creating customized metrics on advanced options data, creating cool visualizations and indicators, and running back-tests and analysis for forward return insights.

4) Custom Chat – I am working on developing a custom chat that will be more advanced with robust features such as dynamic search, alerting, category tagging, window pop-out, scroll-over charts/quotes, private messaging and more.

5) Hawk Research Portal – I am building out a vast research hub all the way from the Macro level down to Stock Specific and everything in between. It will include Trend/Thematic research, customized stock screens, technical screens and indicators, and much more.

6) The longer term vision is to create a full platform that includes our live market coverage along with the research components so you can have all of our information and advanced data on the same screen through the day.

These are a few ideas I have for now and always feel free to contact me with any ideas you may have, as the goal is to make the site as feature-rich as possible, while also keeping a focus on the daily market coverage.

Recommendations:

Trading Books:

Jeff Augen (“Trading Options at Expiration”, The Volatility Edge”, “Day Trading Options”)

McMillan (“Options as a Strategic Investment” – Top Starting Book)

Kahn (“Technical Analysis: Plain and Simple”)

Shannon (“Technical Analysis Using Multiple Timeframes”)

Sinclair (“Options Trading: Pricing and Volatility Strategies and Techniques”, “Volatility Trading”)

DeMark (“DeMark on Day Trading Options”)

Schwager (“Market Wizards”)

Websites: A List of Options Related Websites and Educational Online Resources are on the OptionsHawk Website.

Daily Resources:

· ThinkorSwim Trading Platform:  Prophet Charts and TOS Charts for Technical Analysis, Analyze Function to Diagram Strategy P/L, etc., Multiple Watchlist Broken by Industry, Top Optionable Liquid Names, and Top 2,000 Stocks, Alerts.

· Google Reader for RSS Feeds: I use this for most of my news with the Business Wire PR Directly Fed Through Here, as Well as Useful Sites from Around the Net (WSJ, Business Week, FT, Barrons, DealBook, LA Times, Chicago Tribune, NY Post/Times, DigiTimes, Seattle Post, Houston Chronicle, Etc.).  The daily news/chatter is from my trading contacts passing information via AOL Instant Messages.  (TradetheNews, Briefing, Street Insider, Street Account, FlyontheWall are the most popular wire services, and in that order for best to worst, but I do not use any of those services)

· FinViz: Prefer to Use FinViz for Screening (Fundamental and Technical Screens) as Well as HeatMaps, and a ton of other resources offered on that site, a must-use in my opinion

· Custom Option Scans: The scans provided on the Member Page at the Bottom are a Key Resource in Finding Much of the Day’s Unusual Activity.  I also use the LiveVolPro program where I have set up many custom scans and also scan for trades coming through my watchlist. Bloomberg, if you have access, also has plenty of great functions to breakdown options activity.

· Twitter:  You can follow me on Twitter via @OptionsHawk ( https://twitter.com/#!/optionshawk) and also see who I am following.  There are many great traders and information providers, and anyone I am following is a good place to start.  I use TweetDeck which is handy and posts small notification messages in the corner of your screen along with audio alerts when there is a post.

· Analyzing, Portfolio Tracking, Strategy Screeners, Etc.: I use Optionistics.com for some of their resources, although usually just at night doing scans.  This site (http://www.avasaram.com/) also has some useful strategy screeners for free.  There are also some free Option Rankers here (http://www.optionetics.com/market/rankers/default.asp?freeRanker=yhhrankperc)

·  Street Events: Used for Earnings Dates, Conference Dates, Analyst Meetings, Conf. Calls, Etc.

What is the Trading Hub?

The Trading Hub is an internal page for MAX members with everything we put out in one convenient place including the live chat during market hours. It includes links to our Market Blitz, daily radar write-ups, spotlight trades, research, and more. It also includes links to essential trader tools.

Where can I find options activity for XYZ stock?

For MAX members, the easiest way to find options flow for a specific stock is to go to the Trading Hub and in the right-column select “Hawk Notable Trade Database.” This opens up our daily spreadsheet with all of the options flow we track on a daily-basis, more than 200 adds per day. On this sheet, you can filter out to specific stocks or ETFs. MAX members can also look at the Archives in the top middle of the page. In the search-bar for symbol, type in the ticker you want, click “find mentions” and it will open up a new page with all of our mentions for that ticker including news, charts, and options flow. For example, searching for AAPL:

What is aggressive buying?

Aggressive buying is when trades execute either on the offer of a wide spread or even above the offer and theoretical price, often leading to a sharp rise in IV. It can sometimes represent ‘sloppier’ trades where a buyer is interested in getting in at any cost.

What is a stock replacement?

Often we’ll spot blocks of options that trade in replacement of an existing stock holding. It’s impossible to know exactly why a trader is doing a stock replacement but often someone will reduce their overall exposure in a name that’s run, especially in front of events – taking profits and keeping on a runner for exposure. For example, a trader may sell 50,000 shares of stock for $50 and buy 2,000 January calls for $1, taking their overall exposure from $2.5M to $200,000. Another popular trade is selling puts as a stock replacement, again reducing overall exposure and booking profits while clearly defining when and where you’ll buy back the stock.

What is a buy-write?

A buy-write is when a trader sells calls against a new long stock position, defining a level where they’re willing to be called away while generating some smaller, incremental income from the short call position. For example, a trader may sell 1,500 calls around 35-delta against 60,000 shares of stock.

Why do you say some trades ‘likely trade with stock?’

One of the more common trades we see are spreads that sell calls and buy puts which is a very commonly recommended sell-side strategy for protecting gains in stronger stocks. Differentiating between when that trade is a protective collar or an outright bearish trade takes some common sense and knowledge of the specific stock and we’ll highlight between the two live during the session.

What is L2?

Often, you’ll see us refer to L2 which is short for level two quotes. L2 is the order book for the option at the time it is traded with a complete picture across all exchanges, bid-ask, NBBO, and other market participants. L2 gives added insight into where a trade executed. For example, an option may execute near or at the offer price but be sold to open as L2 shows it being offered out for sale.

What is theoretical value?

Options are priced in a very specific way looking at a number of inputs like implied volatility, time to expiration, dividends, interest rates, underlying price and more and this establishes a theoretical value for the option. The problem is that posted bid-ask spreads often don’t represent the true market and can be misleading. For example, a call option may trade at $5.30 on a 5.30X5.40 spread and look to be sold. But, the theoretical bid/ask at the time of trade may actually be 4.50X5.90 and thus trading above the mid of 5.20 and more likely bought to open. Another example is seeing calls execute on the offer when the spread is actually far wider than posted. For instance, you may see four 100 lots of OTM calls trade at $9.40 on a 9.00X9.40 spread and look bought to open. However, the bid-ask at the time was 8.90X10.30 and thus they executed well-below the mid. When used in conjunction with L2, implied volatility, and other factors, the theoretical price can get a more accurate picture of how an option traded.

What is a VPOC?

A VPOC is a ‘volume point of control’ and a key part of volume profile analysis. Simply put: It is the most commonly traded price within a certain timeframe and the area where buyers and sellers were in balance. We often use YTD VPOC or monthly VPOCs as key reference points and levels of interest for where price may trade back to and bounce as they often act as magnets. Sometimes it is referred to as a ‘virgin point of control’ but that is more specifically a VPOC that hasn’t been tested since it formed. These are important because the market has yet to test whether or not this is still accepted as value.

What is a value area?

The value-area is simply the area where the majority of trading volume occurred during a specific time-period. It usually is pre-set as 70% on most platforms and is one standard deviation above and below from the VPOC. When a stock moves above or below value, it often migrates further up or down to the next value area or even VPOC as price discovery is looking for acceptance. Another common strategy is the 80% rule which says that if a stock opens outside of value and trades back into it for 1-2 bars, it has an 80% chance of filling the value area.