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CHICAGO BOARD OPTIONS EXCHANGE

www.cboe.com

The Chicago Board Options Exchange, the largest options exchange in the world, has created a well-designed, content-rich site that all option traders will find beneficial. Some areas of the site aren't accessible to independent traders, but most sections of the site are open.

The homepage fits within the confines of most desktops. The menu on the left-hand side lists major topics. A click on "Trader's Tools" will take you to the Market Snapshot page, which provides details on how the market is performing. Here, links give you the option of viewing delayed quotes, charts, news, stock splits & mergers, historical market statistics, and volatility data.

All beginning and aspiring options traders should visit the education section. It covers a lot of ground and teaches beginning options traders all the basics, covering topics such as hedging, covered calls, cash-secured puts, straddles, and calls. Each section provides examples of various scenarios together with worksheets to help you understand how to trade options. Each is supported with different strategies that a trader can utilize together with risk/return tradeoffs. Users have the option of downloading interactive worksheets that test the various situations at expiration. You can also choose to download the strategy pack, which essentially contains information similar to that found on the Website. The advantage of downloading the pack is that you have the flexibility to change the parameters of the interactive worksheet.

Visitors can also download the options toolbox. This is an interactive tool that imitates how the options markets work and will help you learn the concepts of options investing. There is also an advanced-concepts section that discusses indices, LEAPS, interest rate strategies, and the concept of volatility.

You can find schedules of seminars offered by the CBOE on this site. Seminars offered by other sources such as The Options Industry Council and Dow Jones University are also listed.

Even the CBOE has products and services for sale at its site in the order area. Some of the links at the site, such as the CBOE API link, are available only to firms or independent software providers who are developing related computer applications. CBOE members have access to information by clicking "Members Site" on the homepage.

A visitor to this Website can gain some good knowledge of trading options. The educational section covers a lot of ground but touches only on the basics. Beginning options traders may find the recommended reading list helpful. For those who are already trading options, this is a great site to get information on market activity, quotes, charts, and market news. The site is well organized and contains information from which most options traders will benefit.

OPTION STRATEGIST

www.optionstrategist.com

Click Enter on the cover page to visit optionstrategist.com, the Website of McMillan Analysis Corp. Here, you can get volatility data, use various options calculators, connect with other options traders, submit questions, get information on seminars, and purchase services related to options trading.

The homepage has a main section with two columns on either side. The main body contains a ÒWhatÕs NewÓsection with links to new services available from McMillan Analysis. Visitors have the opportunity to sign up for receiving these services by E-mail. A click on the ÒQ&A with MacÓ will take you to a page where you can submit options-related questions. Answers are sent by E-mail or posted on the bulletin board.

Other links include the options calculators, volatility data, seminars, and Option Talk. Three options calculators are available: covered-call writing, simple probability calculator, and the expiration breakeven point calculator. The covered-call writing calculator calculates returns if exercised, returns if unchanged, downside breakeven point, and percent downside protection, both with and without margins. The simple probability calculator calculates the probability of the stock being above or below the targeted price. At this writing, the expiration breakout calculator was not yet available.

The data section contains historical option volatility data for most option contracts. You will also find links to order videos, books, and software. The column on the right contains an excerpt from the weekly option strategist newsletter. ItÕs not updated on a daily basis, so youÕre likely to find market information thatÕs a few days old.

Although free services are available on this site, the more interesting features are the daily volume alerts and the Option Strategist newsletter. The Daily Volume Alert Service contains new recommendations plus a reassessment of holdings from previous recommendations. This is followed with a brief discussion of technical indicators such as market breadth and an oscillator indigenous to McMillan Analysis. There is a report containing contracts that had unusual volume activity. It includes statistics of average volume, total volume, calls, puts, high, low, close, change, and implied volatility.

Usually, the recommendations, when they are included, are for short-term trades. Exit points are not indicated on the recommendations, so itÕs up to you to set your own exit points.

The Option Strategist newsletter contains a feature article discussing issues pertinent to options trading. Other topics include seasonal strategies, followups to previous recommendations, sentiment indicators, a commentary on index options, volatility trading, and volume alerts with sentiments and charts. The newsletter contains approximately 10 pages of useful information.

Overall, this site has some nice things to offer the options trader. The interactive calculators, the Option Strategist newsletter, the message boards, and Q&A are what make this site worth visiting.

OPTION SOURCE

www.optionsource.com

Information from a reliable source is always a big plus. Bernie Schaeffer, who is well known in the options field, makes his presence on the Internet at www.optionsource.com. This site opens the door to services offered by Schaeffer's Investment Research, Inc. (SIR), and includes both free and subscription-based services.

At first glance, the homepage seems overwhelming and difficult to navigate. The tabs across the top are there to make navigation easier, but it's better to jump to the sitemap link on the homepage, where you'll find the contents logically organized. The more popular links are all placed on the homepage. These include Schaeffer's Daily Sentiment, Schaeffer's Internet Stock Alert, Trader's Lunch Break, After Hours Market Review, Media Spotlight, Online Chats, Market Bytes, Market Observations, and Stock Options Service Compass. The Schaeffer's Daily Sentiment and Schaeffer's Internet Stock Alert are paid services, but the others are available at no cost. The Service Compass is an interactive tool that asks you a series of questions to help you find the service most appropriate to your needs.

The "Tools" section contains an options expiration calendar, an options calculator, a discussion on expectational analysis (a type of analysis originated by Schaeffer) and a link to order one of the homestudy courses.

Apart from providing marketing gateways to courses and books, the educational section contains valuable information about trading options. These links are not placed on the main body of the site but on the left-hand column. The "Getting Started" section contains fundamentals such as definitions, distinguishing between puts and calls, and in-, at-, and out-of-the-money options. The advanced topics section contains covered-call writing, credit spreads, hedging, LEAPS, straddles, and strangles. Other topics included here are the Black-Scholes formula, buying in-the-money options, and trading the S&P 100 index.

The daily options Q&A section is where you can submit questions you have on trading options. Keep in mind, though, that only one out of all the submitted questions will be answered each day. The answers are archived so you can view all the previous ones.

The options seminars give you an opportunity to interact online in a seminar. Archived seminars are available for $29.95. An options glossary is also available on this site. Products such as books, video series, and the homestudy course are available as well.

The more popular paid services available from SIR are the Schaeffer's Daily Sentiment and Schaeffer's Internet Stock Alert. The opening page of the Daily Sentiment contains an area where you can enter a symbol of a security and see price and put/call ratio charts. You can also get short and open interest information for specific option contracts.

In addition, this report provides the most recent closing values of some of the more important indices. This is followed by a short commentary on the current day's market. It also provides a commentary on the current and historical trading day's equity put/call ratio and other indicators, such as Investor's Intelligence, economic factors, and OEX open interest.

The daily stock ideas section contains stock picks together with an analysis supporting the selection. Other topics included are sector analysis, OEX open interest, current market postures (bullish and bearish), and the Monday morning alert (giving traders a general idea of what to expect in the coming week).

Another paid service is Schaeffer's Internet Stock Alert, which is a monthly publication providing an overview of one of the hottest sectors. It includes a section that discusses activity among a few stocks that reflect the general sentiment. This is followed by a technical discussion of the Internet Index (IIX).

The Net Measures section includes a list of stocks that are showing momentum; a table that lists returns, percent above a short-term moving average, stocks above their volatility bands, companies expected to announce earnings, and comparative average volumes.

There is a recommendation section, which includes a chart of the specific security with target stops followed by an analysis. In addition, it describes different strategies you can use with the entry and exit instructions. A followup on recommendations is also included.

Overall, this is a very useful site for all options traders in spite of the crowded homepage. It contains up-to-date information and alerts you to any type of unusual activity taking place in the market. The Lunchtime Trader's Talk and the after-hours market commentaries are worth visiting on a regular basis.

Originally published in the January 2000 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 1999, Technical Analysis, Inc.