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This week we are following up on our report of 3/03/2011, “What’s Free (or Almost Free) from the Exchanges,” with a review of the attractive free offers from commercial websites in the options business. Some of these sites offer free trials, while others allow you to register for free email newsletters. Often, the information offered at these sites can be used in conjunction with The Value Line Daily Options Survey to help you with your option trading and portfolio management.

The Evolving Options Market

Option trading continues to become more prevalent and mainstream for a number of reasons. The advance in technology has made fast wireless access nearly ubiquitous - not only for PCs but for a host of portable devices as well. At the same time, the Exchanges have ramped up their offerings, with such features as more stocks with dollar strike price intervals and with weekly expirations. Finally, there is a full playing field of information providers and brokers eager for your business. Some of these sites offer free information to advertise their own fee-based services (including brokerage).  Others sites serve as a venue for third-party advertising.

News and Information Sites

The Options Insider www.theoptionsinsider.com offers timely articles on the options market and interesting downloadable online radio reports. A recent radio report was “Good Sources of Volatility,” which reviews resources for volatility news and information.  The Options Insider hosts a plethora of industry-related ads, including offerings from online brokers and exchanges.

OptionMONSTER www.optionmonster.com specializes in keeping its eyes peeled for unusual trading activity in options (using proprietary algorithms to screen out noise). As an introduction to its services, optionMONSTER offers two free daily emails (morning and mid-session) with commentary on movers in the options market (see Figure 1 below).

Figure 1 - Pre-Market Briefing from optionMONSTER

08_12_11 What is Free or almost free from Commercial Web sites - Figure 1

An interesting new feature offered by optionMONSTER is its free version of strategySEEK.  This tool (offered fully functional at the related brokerage site, tradeMONSTER.com) allows you to enter a ticker and order your risk/reward priorities to get a list of suggested option trades.

Futures Magazine (www.futuresmag.com) offers registrants free subscription to its monthly print publication.  This is an excellent resource, especially in its treatment of advanced risk-management issues.

Online Brokers

We have listed these three online brokers because they allow you to “paper trade” an options portfolio using their data feeds and analytic tools. You may want to use these simulated portfolios to test our Value Line Option’s recommended trades. Subscribers could do well to read the Barron’s annual report on online brokers. The most recent of these reports was on March 12, 2011 (link available on request). All three brokers listed below were rated among the top five “Best for Options Traders” in the above mentioned Barron’s report.

ThinkorSwim www.thinkorswim.com benefits from both its powerful option tools and from the research-rich features offered by its recent parent TD Ameritrade.  Its paperMoney account lets you trade a virtual $100,000 in either a “margin” or an IRA account (the latter subject exchange minimum margins for spreads).

tradeMONSTER www.trademonster.com is rich in option features. Its TradeCycle guides the investor selecting an option all the way through making decisions to close the position.  It also offers the full-service version of strategySEEK, which is offered for free at its sister company, optionMONSTER.

OptionsXpress www.optionsxpress.com   also highly rated by Barron’s definitely deserves a look. For the visitor, OptionsXpress offers free delayed-time option chains on all stocks - with some very attractive features. Click on any option ticker displayed and get a detailed profile of the option, complete with implied volatility, delta, gamma and theta of the average bid and ask premiums.

Some Other Free Offerings

OptionsAnimal www.optionsanimal.com offers free workshops. The site also offers reasonably-priced training programs in partnership with optionMONSTER.

IVolaility.Com www.ivolatility.com offers free trails to most of its online tracking products.

Discover Options www.discoveroptions.com is free site offered by software company OptionVue. Many of the strategy reports offered are well worth reading.

Final Note

We recommend that you take the time to browse at least some of the sites listed above. The paper trading offered by the brokers listed above can be especially useful for subscribers wishing to test out their option skills.

Prepared by Lawrence D. Cavanagh, vloptions@valueline.com