For the software review, I received the 30-day trial pack, which contained a software CD (v 1.66), a training CD, two manuals, and instructions on CD installation and on working with ASX assets (as the software was designed for the USA options market). There was a 30-day free trial of a live data feed by a separate data vendor, a newsletter and an options book, plus several brochures. The trial pack allowed me access to end-of-day data and the weekly background database updates, which contain the volatility charts. By reading both manuals and going through the training CD, I gained a lot of practical information and knowledge about both the software and option trading in general.
I found the install easy, with the comfort of knowing I had access to technical support, which is provided by the Australian distributor via a free-call 1800 number. Getting started with the software required setting up a watch list in the ‘Quotes Display’ window. Selecting what underlying instrument you can trade meant selecting commodities, indices, currencies or USA, ASX and Indian stocks from a look-up list.
The initial screen is the ‘Quotes Display’ view, which has the spot details. From the ‘Quotes Display’ screen you gain access to the option pricing by highlighting the stock code and clicking on the Matrix button in the toolbar. This screen is one of three configurable screens providing detailed option information. The matrix screen is where trades are placed for analysis. I found the trade analysis capability to be very useful.
The second screen available from ‘Quotes Display’ is the ‘Price Chart’ screen. It allows for price charting together, with basic technical analysis.
The third screen that is accessible from ‘Quotes Display’ is the ‘Volatility Chart’ screen. This provides a graph of the Implied Volatility (IV) and the Statistical Volatility (SV) or Historical Volatility (spot price changes). I found it was a big help to be able to step quickly through each ASX ETO in the watch list.
The software has two further tools. The first allows for surveying (scanning) for either high or low IV/HV or a combination of high/low percentile volatility stocks. The second tool is the ‘Trade Finder’, which allows the user to select a number of parameters with which to scan the database. Once the results are obtained each trade can be analysed for profit/loss with the ‘Graphical Analysis’ tool. The Analyze button provides a ‘Graphical Analysis’ tool that gives all the details of the option trade together with a profit/loss graph. Any component of the trade can then be changed to see what impact it would have on the trade. I found this a wonderful tool that can highlight possible issues with a trade.
The ease of use and the power of the analysis tools make it a good package. The software was first created in 1983, so it is stable. It may not have the latest Windows GUI look and feel, but I like how it does the job of option pricing, scanning and analysis.
I found the OptionVue 5 software extremely well packaged and presented, with easy to read instructions about getting started, including an instructional CD which talked you through the OptionVue software and how to use it with easy to understand instructions – no tutor necessary. The whole process from start to finish, including downloading the background data, took only about half an hour. It took a little more effort to arrange a download for the ASX Options, but again, the information was easy to follow, and there was no trouble getting the data for the download. As long as you download the data at the end of each trading day, the system automatically picks up stock splits, consolidations and other corporate actions.
As the matrix looks like, and works in a similar way, to an Excel screen, it was easy to customize the screens to include or exclude columns of data, and to find my way around.
One of the best things about OptionVue 5 was the abundance of information to help those who use the system, from the free 58-page ‘Getting Started’ booklet to online tutorials and help available via the website. The free CD explains how to download data and use the software to its best effect. The Product Consultant will talk you through how to use it should you need help. The two work together to diminish the need for a lengthy training course. I also liked the enclosed book on options trading and the User’s Guide was very thorough.
OptionVue 5 runs well using a delayed data system, enabling you to download the day’s data at the end of a day’s trading, and to scan the markets for tomorrow’s trades. You can vary parameters such as volume, volatility, probability, and, of course, price. It does all the legwork for you – you type your trading parameters into the Trade Finder and the software produces a list of options to trade that fit within those parameters. It can also list them on the probability of a positive outcome. The option of live data feed is available should clients wish to use it.
You can analyse each trade by running it through the matrix as a proposed trade. By using the profit and loss charts, you can see at a glance your break even point, along with predicted future prices, expected returns and the probability of success for the trade. You can also overlay two different trades to see which strategy would be the more profitable. There is an excellent facility to monitor paper trades, so you can monitor your trades closely before committing real money to them.
OptionVue 5 is a mature product that has evolved since DOS times. However, despite the vintage look, OptionVue 5 is a sophisticated options analysis tool that has been written by traders for traders. Credit must be given that with such comprehensive features they have kept the interface simple and intuitive.
The introductory CD presented by Steve Lentz is excellent. It shows the main features being used as if you were doing a trade. The setup is straightforward and quick to get started. OptionVue 5 comes partially configured with some of the major indices, US stocks, commodities and currencies already in the quote list. Options on ASX stocks require you to download the OptList.csv file weekly from the ASX site but European indices aren’t available.
The toolbar buttons supply all of the crucial information as expected. The nicest part of the interface is the interconnectedness of screens. The data from one screen can be automatically loaded into the other screens for further analysis. This is a great time saver. For example, you can set a target in the price chart that is then used by the Trade Finder to suggest the best options strategy. This can then be sent to the quotes display and matrix to examine pricing and the payoff diagram. If you get confirmation from your broker you can convert the trade into an existing position, which is then registered in your trading account transaction log.
One of the most important factors when trading options is the implied volatility compared to the statistical volatility. OptionVue 5’s volatility charts are easy to understand yet they have enough detail to cater for different trading styles. I found the percentile concept very useful in providing an absolute measure to compare volatility for each underlying instrument. Although other charting capabilities and technical analysis studies are very limited, the ones provided are quite useful. I especially liked the alternative indicators based on the put/call ratios and volumes as a useful sentiment indicator. The software uses a proprietary method for options modelling and with its options matrix and summary, it displays a great deal of information to help you formulate your trading ideas. There is a bit of drilling down through dialogue boxes to get skew charts, but the process is very logical and again provides the flexibility to get a simple view from a complex number of choices. There are also some clever search features such as Trade Finder, Survey and OpScan to help find potential trading candidates, with the facility to programme your own searches.
As an options trader, you need a system that provides an advantage. I think OptionVue 5 provides this with its focus on helping you to find, analyse and execute good trades. Rather than just looking at lists of numbers you can understand options from a visual perspective and therefore have greater confidence in your decision making and in the management of your trading.
We would like to thank the reviewers for their time and effort spent in reviewing the trial of OptionVue 5 – Options Analysis Software.
Clarification: Both ASX and US data are provided. What elevates OptionVue 5 above its peers is its exclusive capability to model how volatility can affect your trade’s value. Most software and web-based analytical tools use average volatilities across an entire option chain to perform calculations. This can result in less accurate analysis of how a trade may actually perform in the future. With 22 years of research and development powering them, OptionVue 5’s three proprietary volatility modeling techniques account for price changes in each option. This critical detail gives traders the ability to better identify and separate high and low probability opportunities before risking capital. Profitable options trading requires robust models to make accurate projections – the robust models found only in OptionVue 5.
With OptionVue 5, traders also have the unique capability to graphically analyze theoretical trade performance at any date, price and volatility in the future. This highly custom-built environment allows traders to analyze positions of any complexity and view profit and loss projections in definitive detail.
This article was originally published in the Sep/Oct 07 issue of YourTradingEdge magazine (www.YTEmagazine.com). All rights reserved. © Copyright 2009, MarketSource International Pty Ltd.
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