These pages explain the measures and screening rules that a disciplined options workflow is built on, in plain English. Each article opens with a direct answer, then goes into the mechanics. They describe how the numbers work and how Options Scanner computes them; what to trade, and whether to trade at all, always remains the reader's own decision.
IV rank places a stock's current implied volatility inside its own range over the past year, on a scale of 0 to 100. A rank of 84 means today's IV sits at the 84th percentile of everything that stock has shown in a year. It answers only one question: is this option premium high or low for this particular stock?
The net volatility risk premium (NVRP) measures how much more the options market charges for volatility than the stock has actually delivered: (ATM implied volatility minus realized volatility) divided by realized volatility. A positive NVRP means options are priced above the stock's recent movement; a negative NVRP means the market is charging less than the stock has been moving.
The VIX index expresses the market's 30-day implied volatility for the S&P 500. Banding it into regimes gives context for premium selling: below 15 is complacent, 15-20 normal, 20-25 elevated, 25-30 fear, and above 30 panic, where premium is richest but position sizing discipline matters most.
VIX term structure compares implied volatility across horizons: 9-day, 30-day, 3-month, and 6-month. In calm markets the curve slopes upward (contango). When short-dated volatility prices above long-dated (backwardation), the market is paying up for immediate protection, which historically marks stress.
A credit spread sells an option and buys a further-out one, collecting premium up front and profiting when the stock stays away from the short strike. A debit spread pays premium for a defined-risk directional position. Rule-based disciplines pick between them from two inputs: the directional signal and whether implied volatility is rich or cheap.
An iron condor sells an out-of-the-money put spread and call spread on the same expiration, profiting when the stock stays inside the short strikes. Because the structure has no directional opinion, the entry screening carries the entire edge: the volatility premium gate decides whether the trade is being paid enough to exist.
An option's delta approximates the market-implied probability that it finishes in the money. Placing a credit spread's short strike inside a 0.15-0.30 delta band keeps the implied odds of the strike being breached between roughly 15% and 30%, balancing premium collected against how often the position gets tested.
Expiration choice trades decay against risk. Time decay accelerates as expiration approaches, but so does gamma, the speed at which a position's directional exposure changes. The 30-45 days-to-expiration window is the classic compromise for premium selling: meaningful decay, gamma still manageable, and time to adjust when a strike is tested.
The wheel is a recurring income cycle: selling a cash-secured put collects premium; if the stock is assigned, selling covered calls against the shares collects more premium; if the shares are called away, the cycle restarts. Its discipline lives in two rules: only running it on stocks worth owning at the strike, and never selling a call below the shares' cost basis.
Probability of profit is the market-implied chance that a position finishes above breakeven at expiration, computed from the option chain's own prices. It is a model-based estimate under the market's implied distribution, not a promise, and it says nothing about how large wins or losses are.
The greeks measure an option position's sensitivity to the things that move it: delta to the stock price, gamma to delta itself, theta to time, vega to implied volatility, and rho to interest rates. Reading a position through its greeks turns 'what is this trade' into 'what has to happen for this trade to work'.
Dealer gamma exposure estimates the aggregate hedging position of options market makers from chain open interest. In a positive-gamma regime dealer hedging leans against moves, dampening them toward mean reversion; in a negative-gamma regime hedging chases moves, amplifying trends. The estimate is a context signal for index products, not a trade signal.
The at-the-money straddle expiring just after earnings prices the market's expected move for the event: a $10 straddle on a $200 stock implies roughly a 5% move in either direction. Rule-based disciplines treat earnings as a first-class event: undefined-outcome dates get screened, not predicted.
Manual screening and screening software apply the same criteria; the differences are coverage, consistency, and record-keeping. Software evaluates every ticker against every rule on every scan and logs why each candidate passed or failed. What software cannot do is decide what to trade: the judgment, and the decision, stay with the trader.
Evaluating a credit spread is a fixed sequence of checks, each answering one question: is the volatility rich enough to sell, is the short strike far enough away, can the position be exited, does an event span the trade, is the credit adequate for the width, and does the worst case fit the account. A candidate that fails any single check fails the evaluation.
A credit spread's exit rules are set at entry, not improvised later: close at a fixed fraction of the credit collected (commonly 50%), exit by around 21 days to expiration, and stop the loss at a multiple of the credit (commonly 2x). Mechanical exits exist because the final weeks hold the least remaining reward and the most gamma risk.
A roll closes an existing option position and opens a related one further out in time, sometimes at a different strike, in one net-priced order. Done well, it extends a thesis that needs more room while collecting additional premium; done reflexively, it converts a small realized loss into a larger deferred one.
Assignment is the short option holder's side of exercise: the seller of a put buys 100 shares per contract at the strike, the seller of a call delivers them. United States equity options are American-style, so assignment can arrive any day, but it becomes likely only when the option's remaining time value falls below what the holder gains by exercising.
Defined-risk options structures make honest sizing possible because the worst case is a known number at entry. A sizing discipline caps that worst case per position (a few percent of capital), caps the sum of worst cases across open positions, and normalizes contract counts by each stock's actual volatility so risk per position is comparable.
An options liquidity screen answers one question: can this position be exited at a fair price when exiting matters? The practical screen has three parts: minimum open interest at the traded strikes, minimum daily volume judged against how much of the session has elapsed, and a ceiling on bid-ask width as a fraction of the mid price.
Volatility skew is the pattern of implied volatility across strikes at one expiration. Equity options normally price downside puts above upside calls, a persistent asymmetry born of crash demand; the information is in deviations from the usual shape, which research links to the direction of subsequent moves.
A calendar spread sells a near-dated option and buys a longer-dated one at the same strike, paying a net debit. It profits when the near option decays faster than the far one loses value, which makes it a trade on the volatility term structure: richest when near-dated volatility is expensive relative to far-dated.
A breakout base is a consolidation whose internal behavior is consistent with accumulation rather than distribution: the stock holds near its highs after a strong prior run, each pullback is shallower than the last, price volatility contracts, and volume dries up. Each element is measurable, which turns a chart pattern into a checklist.
LEAPS are options with roughly a year or more to expiration, used to express multi-month directional theses with a fraction of the capital of stock ownership. The standard convention runs deep in the money, around 0.70-0.75 delta, where the option behaves mostly like stock and time decay is gentlest per day.
Paper trading validates process: whether entry rules fire as designed, whether exits execute, whether the discipline survives contact with real market hours. It systematically flatters economics, because simulated fills skip the bid-ask cost every real order pays. Both facts are useful as long as neither is mistaken for the other.
A trade journal becomes an instrument when every position records its entry state (the measures that justified it) and its labeled outcome. That dataset supports the two audits that improve a discipline: calibration, comparing forecast odds against realized results, and behavioral analysis, finding the patterns in one's own decisions.
A composite signal score blends several technical indicators, each voting within a bounded range, into one number, for example -5 to +5. The composite exists because single indicators fail in known, different ways; requiring agreement across families of evidence filters out most of each indicator's false positives.
A price cone projects the options market's expected move forward through time: from today's price, the band widens with the square root of time at the pace implied volatility sets. Roughly two-thirds of outcomes are priced to finish inside the cone at any horizon; strikes and breakevens drawn against it show a structure's position in probability terms.
Position greeks do not add honestly across different stocks: a share of delta in a staid utility and in a volatile semiconductor name are different exposures. Beta-weighting converts every position's delta into equivalent units of one reference index, making the portfolio's net directional exposure a single meaningful number.
Meta-labeling, from López de Prado's work on financial machine learning, splits trading into two models: a transparent primary (the rules engine) that decides what qualifies, and a learned secondary trained only on the primary's own outcomes, estimating the probability each qualifying trade wins. The secondary filters; it never originates.
Options orders are limit orders in wide, negotiated markets, so execution quality is a real edge component: the difference between filling at the mid and filling near the far side of the quote is often a meaningful fraction of a spread's whole edge. Discipline means pricing from a fresh mark, moving in measured steps, and measuring the results.
A stock's price is expected to drop by roughly the dividend on the ex-dividend date, and option prices embed that drop in advance: calls on dividend payers price lower and puts higher. The sharpest practical effect is early assignment risk on short in-the-money calls the day before ex-dividend, when the dividend exceeds the call's remaining time value.
A screening tool computes and describes: it evaluates market data against criteria the user configured and reports what passed, what failed, and by how much; nothing in that output is investment advice. A registered investment adviser, by contrast, directs: tells a specific client what to do with their money. The line is functional, not cosmetic, and it decides who is responsible for the decision.
A credit spread is tested when the stock approaches or crosses the short strike with time remaining. The defined worst case has not changed, and the position has four mechanical paths: holding while the exit rules stay unbreached, closing at the loss stop, rolling out for a net credit, or adjusting the untested side. Each has exact, knowable consequences; panic is the only path without them.
Each calculator runs entirely in the browser on numbers the reader types in: no login, no account, no market data feed. The prose around every widget explains the formula, walks a worked example, and names the assumptions, because a number whose model is hidden is a number that cannot be judged. Deeper treatments of each concept live in the Learn library.
Free expected move calculator: stock price, implied volatility, and days ahead produce the one and two standard deviation price ranges the options market is pricing.
Free probability calculator for options: the log-normal model probability that a stock finishes above or below a chosen level, the same family of arithmetic behind POP displays.
Free single-leg options profit calculator: strike, premium, and a price at expiration produce the profit or loss, breakeven, maximum profit, and maximum loss for long or short calls and puts.
Free position size calculator for defined-risk options trades: account equity, a per-trade risk budget, and the maximum loss per contract produce the contract count that fits the budget.
Three independent literature reviews of the Options Scanner engine against roughly 340 published sources: what the evidence supported, where the engine was wrong, and what changed.
A 130-source literature review of the Options Scanner engine: where the volatility-premium core matched published evidence, four places it did not, and the fixes shipped in v3.96.0.
A 90-source review of chart patterns, expiration selection, the conviction engine, and probability of profit: what held up, what did not, and the v3.97.0 fixes.
A 120-source review of the automated agent's order lifecycle against SEC 15c3-5, MiFID II RTS 6, FIX-era engineering standards, and the human-oversight literature, and the v3.98.0 fixes.