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Why do you call your site and tool "Gamma" Optimizer?

Trading options successfully is essentially about getting the most "gamma" out of your trade. The price of an option is actually parabolic with respect to the price of the underlying, and gamma represents how strong the parabolic movement in price is. Put another way, gamma tells us how much "optionality" we are buying when we buy an option. In calculating the best strike and expected return in an options chain, our Gamma Optimizer is identifying the best gamma -- i.e., the parabolas with the highest projected peaks.

See related article on "Optionality" for more detail.

How does the Optimizer work?

The Long Gamma Optimizer is a tool that helps you pick the option strike and expiration that are most efficient for a particular move in the underlying. The Optimizer provides a graph comparing of all the expirations in an options chain with the strike on the x axis and the total return (or RR) on the y axis. The peaks of the parabolic lines give you the best strike and expected return in percentage terms, with the best 3 results listed just above the graph.

To get started, enter an Underlying Symbol. Set the Expected Move (up or down, plus number of points), and the Stop/Risk (number of points you're willing to risk). Finally, set the timeframe of the move in terms of # of Days. The other fields are filled in with our defaults.

See video tutorial.

What's the benefit of joining the Trading Room?

In our trading room, you can ask questions of Leo Valencia ("Leov"), who created the Optimizer, as well as interact with our dynamic community of options traders. You'll receive Leov's options trade ideas with detailed explanation and education, as well as his analysis of options and implied volatility related to the S&P 500, Metals, and individual stocks.

How can I use the Optimizer to design the best hedge for a core position?