Probability of Assignment (POA)

Saturday, June 14, 2014 EST
Probability of Assignment (POA) is useful to determine if the an option will expire worthless. Keep in mind this is called "Probability" of Assignment and is not a guarantee the option will expire worthless, but another factor an option trader can use in their analysis.

POA in the Option Screener is based on the options Delta. For more information on this topic click this link to review a WikiPedia article. 

Scanning for Options with Widler's RSI

Sunday, May 4, 2014 EST
Wilder's RSI is useful to narrow down the results when looking for trades when writing options.

For example: Let's say you want to write a Put Credit Spread or a Naked Put. In this case you want to write options that will expire worthless so that you can keep the money.  RSI is a good feature to use since it can help identify stocks that are overbought or oversold. In other words RSI can help to indicate when a stock is bottoming out or topping out.

You raise the likelhood of success in writing options (for example naked puts) you want to expire worthless if you write out of the money and when the stock close to bottoming out.  Combine RSI along with a low Probability of Assignment (POA) to help avoid assignment and write options that will expire worthless. 

Example:  The green area on the chart are RSI Overbought area and would have been a good place to write out of the money calls or call credit spreads.  The red area on the chart are RSI Oversold areas and would have been a good place to write puts or put credit spreads.  

Also notice on the chart below between September and and November. RSI was overbought and after a pull-back moved higher.  RSI does not work 100% of the time, but is another tool to help when writing options.