Option Trading Classes

The four distinct stock option types in various combinations yield 16 stock option classes. The stock option class is represented by a four letter acronym. For instance, BDRE stands for Bullish, Day, Reversal, Early.

When stock option traders view results in this column they are looking for a stock that has pulled back from its high, established support and is now resuming the longer-term uptrend (bullish, reversal). The move has broken minor resistance, but it has not closed above that critical price level (early). Longer-term technical indicators like moving averages (100, 200), ADX, the relative value of a long-term moving average over the last 60 days, the relative average daily volume over the last 60 days and the relative daily range over the last 60 days are used factored into the search.

The scan identifies stocks that are in a long-term uptrend, have increasing daily volume and an expanding daily range. When stock option traders view the results in a column, they know what they are looking for. This search hierarchy allows them to quickly flip through stock charts. They use pattern recognition skills to quickly identify new option trading opportunities. For a detailed description of each stock option class, click the links in the left margin.