Options Matrix Plus

What is the Options Matrix Plus?

Introduction

Before we look at what the Options Matrix Plus is, let us just look at what it is not. It is not a trading system! If you are looking for a trading system, in other words something that will tell you "buy now.." or "get out now" - this is not it. The Matrix Plus will never prescribe to you when to get in or out of a position. We simply do not play that game. If you want our opinion on trading systems, please look at the trading pitfalls page.

Options Matrix Plus is two things:

  1. It is a complete Options Trading Course, and
  2. It is a very powerfull Options Trading Analysis platform

The Options Matrix Plus

Why "Plus". There is an earlier version of the tool as well - The Options Matrix. Matrix Plus is a much jacked up version of the tool with many more advanced search options, from there the "...Plus" part.

Why Options

We have already through our trading strategy page and throughout this website higlighted you a couple of facts about options. The thing is this (to mention a few quick facts):

  • Options allow us to change the probability of a trade into our favour
  • Options allow us to carefully manage risk
  • Options allow us to build a consistently profitable trading business, we are able to successfully compete against the big players in the market
There are many misconceptions about options, typically spread by (1) the misinformed and (2) by the big traders who do not want you to discover the advantages of options trading.

If you sold an option and the market turns against you, you are in trouble

This is simply not true. An option is traded like any other transaction. If you sold an option now, and 5 minutes later decides it was the wrong decision, you may immediately buy that option back at the same (or close to same) price. If the market turns the wrong way one day after you entered, it is as simple as buying back the option the next morning - you are not into an irreversable long-term fix here.. you can buy and sell options as freely as you can buy and sell a currency pair or anything else. Options do not suddenly jump in value and become ridiculously expensive, in fact..

An Option looses value much slower than the underlying market

An option's value changes between a fraction of 0 and 1 (0% - 100%) of the value of the underlying market! Never more than 100%! In other words, at most as fast as the market!! This is very important! Most of the time an option changes value much slower than the market changes value. In other words, if you traded in say Gold and the price of Gold changes by one dollar, then if you traded directly in the market, you will make or loose $100. However if you traded an option you will ALWAYS make or loose less than $100, if you have carefully selected your option, upon entry about $20. By the time it looks like you are getting into trouble around $50. In other words, you are always sitting with a LESS risky trade with the option than if you traded in the underlying market directly!!

It also means that when you do get into trouble with an option, you may enter into the underlying market to get you out of trouble! You do not have such an option with trading in the markets without options.
For example, you will sell a CALL option when you expect the market to trend down or to stay flat. If the market suddenly starts trending up, your option will get into trouble. But since the market now trends UP, and since the option looses value at only 50% of the movesize in the market, you may BUY the market. If the market now continues to trade UP you will make 100% on your long position in the market (you bought) and loose 50% on your option, for a net gain of 50% - you can no longer loose if the market trades up!! In other words you are able to salvage a losing trade!

An option looses value over time!

In other words, the value of an option tomorrow, if nothing else has changed, will be less than the value it has today! Why is this important? Probability favors the options seller! If I have sold an option today (and thus received money for it), if nothing else has changed that same option will cost less tomorrow - and if I want to buy it back it will therefore be cheaper and I will sit with a profit just for the fact that 1 day of time has went by. If I do this on a Friday and buy it back on a Monday, then I have made money over the weekend for, well, for nothing happening - the markets are closed over a weekend.

In order for the price of the option to stay constant, the market has to move with time to compensate for the loss of value over time. Selling an option, we therefor force the market to move - if it does not move (stay flat, trading level), or move in the wrong direction, the option will loose value (become cheaper to buy back!). We are sitting with an immense advantage selling options - we have a way to force the market's hand. Of course no one can force the market's hand, which is fine, it just means in that case we will be making money! No wonder the big buys do not want you to discover this way of trading!!

A complete Options Trading Course

From the above, you can immediately see that there are much more about options than meets the eye. There is simply no way that it is possible to teach you everything that you need to know about options on a simple website like this! Neither can I sit with you across a cup of coffee and explain it to you. There is just simply too much information. You need a certain in depth understanding of the markets before you attempt to understand the options market. But once you do, it open doors you haven't previously thought existed..

This is the first thing about the Options Matrix Plus - it is a complete options trading course, with complete manuals to teach you the underlying theory with examples, and trading strategies, and trading simulations and tools to analyse and to play with and to, through hands-on experience acquint and train yourself with all the little aspects about options. There are so many different option trading strategies, strategies for beginners, intermediate or advanced traders, strategies for trending markets or for level-trading markets, strategies for when the market is calm and content and strategies for when they are wild and volatile. It allows you to select a market condition and select a strategy, then explains the strategy to you, shows you an example and allows you to open a trading simulator and play with the strategy, try out different options, change the market prices and see the effect on your profit / loss, etc.

Options Trading Analysis

On any particular trading day there are from 60,000 to 150,000 options available in the markets that we are monitoring. Your particular trading strategy may call on you to sell options that are over-priced (abnormally expensive), or to seek out and buy those that are undervalued. Or maybe a more advanced strategy, maybe through the training aid you have learned about and simulated a trading strategy of which you really like the odds. The question is, how do you filter out the particular options combinations you are looking for and the particular markets to look out for, amongst more than 100,000 possible options?

This is where the second part of the Options Matrix Plus comes to life. You have a data feed (we will refer you and you will subscribe to a data service in the United States that provides you with a daily feed of all the options available for the markets you are interested in). Then you have an advanced options filter. In this tool you will enter the parameters that YOU want to search for - it may be a few simple parameters - such as give me all options that expire in 15 days or less, for which we have decent trading volume, and for which there is a 75% or better probability that the option will expire worthless. Or it may be a complex trading strategy. Once applied, the filter will search through all avaialble options in the market, for all markets and highlight (1) the particular markets you need to look at (the British Pound or Soybean Oil or Gold) and (2) the specific options in that market you need to look at.

Now that you have found your particular markets, and note that the matrix will probably give you a couple of markets, you may start investigating - first you will look at the market price charts - some markets you will just discard "because they just don't 'look' right", some you may discard because you do not like trading in them (we all have our favorites). Those that you fancy you will simulate trading the options, you will play with different options, you will change the market prices going forward and see what effect it will have on your position. Or maybe you will first look at where the big guys are positioning themselves in the market (always a good idea) and go hide behind them. Whatever your strategy, you analyse and play with a potential position, you gain as much information about it as you can get, you simulate, you plan, you create yourself a detailed strategy, a trading plan, you do a sensitivity analysis on that trading plan. Finally, at the end of this process you have a detailed trading strategy - you know which market, which position, how much money you want to make, how much loss you are prepared to take and how you will take that loss, how or when will you get out of the trade. You have a detailed plan, a complete understanding of the market you will be trading, your objectives, your strategy.

This is all done off-line, in the afternoon after work, or maybe during your lunchbreak, usually early in the week. When finally the time comes to execute your trading plan, you are ready, you are prepared, you know what to expect, it is a simple matter of executing what you prepared - I will usually enter my positions on my iPad, to be executed when the market opens, or shortly thereafter. Then I leave them and carry on with the rest of my day, they usually execute somewhere in the afternoon, maybe while I am in peak traffic. If not I'll carefully monitor and execute according my trading plan once home. The point is this - you have a carefully planned strategy that you follow - this is a business and we take it seriously, we are into this to make money - it is not a "feel of the moment", "shoot in the dark", "I'll manage the situation as it develops" thing - that is a recipe for failure.

The Options Matrix Plus is your handy companion through all of this, every aspect of your trade planning and execution. Once you are in the market you will use the Options Matrix to daily track and monitor your trade against your trading plan, to do additional analysis as the market develops, etc. Every aspect of your trading business that you can think of, you will manage through the Matrix Plus tools.

NOT a Trading System

From the above, the Matrix Plus is a complete analysis tool! Note that it does not prescribe a method of trading - you need to supply your own method! It allows you to search for, analyse, simulate, plan, etc. but it does not prescribe the method you should follow. Yes there are many strategies you can follow and it will teach you all the strategies, but you have to decide which of these strategies you like, and which you don't like, which you want to try out and which you want to avoid. The way that I use the Matrix is completely different from the way that Alan Parry (the creater and founder of the Matrix Plus) uses the Matrix Plus, is completely different from the way the next guy uses it. Our strategies, our approach to the markets differ. Some people are looking for options with a 95% or more probability of expiring worthless, only making $50 on a trade (but then if trading 10 contracts at a time it is still quite a bit of money). The next guy may be looking for options with only two days left to expiry. The next may be looking for options that loses a lot of value over time.

That part is up to you - your individual style, your risk profile, how big is your account, what is your aim with your business, what do YOU want to achieve? We all use the Matrix Plus for our analysis and planning, but we all use it differently - that is, the system does not prescribe how you should go about your business - that is why you get training, to understand the markets and understand what you can do - but in the end you have to adapt it all to your own personal trading style, your goals and your objectives.

Support

Note that when you invest in the Matrix Plus you also automatically become part of a family and support is but a phone call or an email away! You don't invest in the tool, go on your training and are then left to yourself. You have to find your feet first - we do suggest in the beginning that you first paper-trade (in other words simulate what you would do without committing real money), but the important thing is you are not on your own. By all means, if you have questions or need additional clarification on something, ask! Your email may not get an immediate response, but you will get a response!

Conclusion

OK, lot said here. The Options Matrix Plus is (1) a complete options training course and (2) it provides many different tools to filter out, analyse, simulate, plan ahead, monitor, etc. many different options trading strategies. For more information, we refer you to the master - Mr Alan Parry's personal website. Alan is the father of the Matix Plus, he created it, put it all together. Please use this link to get more information on the Matrix Plus from the master himself.