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Is the NYSE Tick Indicator worth being used in trading options on ETFs?

christ
christ ✭
edited July 2014 in SharpCharts
Hello everyone!

Could some option trader let me know whether the NYSE tick indicator is of any use in trading options on ETFs (DIA, QQQ, ...), and if yes how to use this indicator and how to drag it onto Stockcharts charts? Thank you in advance.

Chris

Best Answer

  • markd
    markd mod
    edited July 2014 Answer ✓
    Many years since I traded options (on the OEX contract, not an etf), so grain of salt on this answer:

    the easy part - put $TICK on the chart - on the chart work bench, select "Price" from the indicator drop down, type in $TICK, decide where you want it on the chart - above or below.

    How to use it:

    Basically, two ways - extreme readings and divergences.

    Extreme readings often mark reversals. What is extreme can vary, but the default lines of +500 and -500 seem reasonable, although much higher numbers are possible.

    Divergences are of two kinds - Price makes new extreme - like a second new high or low after a minor reversal, but $TICK doesn't follow; or, $TICK makes a new extreme after a minor reversal, and price doesn't follow.

    The problem with options back when I traded them, and it may still be the case, is the spread. Option players are pretty smart (even automated now), so you have to be pretty quick with mind and mouse to get in or out ahead of them. Also, you have trade in a certain minimum size (I found about 10) to make it worthwhile, so you need a pretty good amount of capital (for an average joe) to do that.

    Maybe play at it for a couple of months before you put up real cash.

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