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OpScan Formula Building |
Building your own OpScan formulas can save you endless amounts of time in searching for trades that meet your own personal trading criteria. An overview of the elements of an OpScan formula can be found in the OpScan tutorial. It is suggested that you become familiar with the different parts of OpScan formulas prior to building your own. OpScan has a set of specifically defined parameters and operators that must be used when creating formulas. For your convenience, feel free to print lists using the links below:
While writing OpScan formulas, use the "Test Syntax" button to make sure the formula is being written in the proper language and structure that OpScan will understand. A "Formula is valid" message will appear when the formula is written in acceptable terms. If a mistake has been made, "Formula is invalid" will appear with an explanation describing the deficiency - the position of the error identified by a flashing "cursor". Now let's proceed to the formula writing! Writing the "Pick" line formulae The "Pick" line is the most critical element of the OpScan formula as it defines the criteria of the options for which you are searching. Writing the formula for the "Pick" line is much easier when you know precisely what you want to find.
If you can explain in simple terms exactly what you wish to find, transfering the information into a mathematical formula is much easier. Once the criteria is written down, you can start breaking down the explanation into sections and then create a mathematical formula using the OpScan parameters and operators for the OpScan search engine.
Now that we have a written explantion of what we wish to find, we can start creating the actual mathematical formula by transfering each sentence into mathematical terms.
Now that we have transferred each sentence into mathematical formulae, we can combine them into one string for the OpScan "Pick" line formula. We will use a comma followed by a space to seperate each individual criterion that has been defined. The comma acts as an "and" for searching purposes which designates that each subset of criteria must be met before a security is included in the OpScan report.
Now wasn't that easy? By first writing down the description of our search criteria, it was much easier to transfer the information into mathematical formulae. Sentences 2 and 3 contain variables that have been arbitrarily chosen for the purpose of explanation and could have been written with a slightly different appeal. In Sentence 2, we could have used IV1 vs. IV2 or IV2 vs. IV3 however IV1 vs. IV3 was chosen as it identifies the largest time differential. Sentence 3 contains a variable between the parenthisis for the number of days used to calculate the average ATVOL$(n). A 5 day average was used for explanation purposes; however, "n" allows for any number between 1-20. Writing the "Sort" line formula The "Sort" line provides the basis for arranging the output in the OpScan report. A formula is used and will typically relate to your search criteria. In the example above we may choose to view the output in order of the underlying stock price or average daily dollar volume of options traded. However, since we are specifically looking for a difference in IV (implied volatility) between 2 expiration months, that is the basis that we will use for arranging the output on the OpScan report. Write a simple sentence explaining how you wou like to view the output before attempting to write the "Sort"line formula.
The formula will subtract the longer term's IV from the shorter term's IV and result in the actual difference between the 2 expiration months IVs. The output will then be displayed with the largest differential at the top of the list in descending order. Some variations of "Sort" line formulas can even be written to further filter the output, if desired. Identifying the "Show" Line parameters Now that the "Pick" and "Show" line's formulas have been written, we need to identify the information desired to be seen for each security. Again, write a simple sentence first and then replace it with the proper OpScan parameters.
Simply insert the appropriate OpScan parameter for each individual criterion that is desired to be viewed and separate them with a comma and a space. Let's view our work!
The final steps in building an OpScan formula are to identify the group of securities you wish to search in the "Include" section, and to specify the maximum number of items you wish to have included in your report. That's it! You have now built your first fully functional OpScan formula that you can use to search for calendar spread candidates. View the Opscan report. You can transfer the above information into OpScan and run the report. Try changing the formula slightly and view the difference that it may make to the output. Try creating new formulas on your own and, if you need help, feel free to contact your product consultant for assistance. If you are not a current subscriber, fill out the online subscription form and start using OpScan to help you find the options that meet your criteria...in a matter of seconds! Log into the OpScan forum on the message boards by clicking here: OpScan Forum |
