Stock and Options Trading Tools
Call Spread Investigator: Identify Call Spreads With High Theoretical Returns
OptionsHouse's Call Spread Investigator scans the universe of equity options to find call spreads with high theoretical returns. To do this, Call Spread Investigator:
- Multiplies the return if the underlying stock in a call spread reaches the higher of the two strike prices by the probability that it will reach that price, as determined by option Greeks
- Subtracts from this amount the cost of acquiring the call spread using market prices for the call options
- Divides the resulting amount by the cost of acquiring the call spread to determine the theoretical return
In addition, Call Spread Investigator attempts to filter out bad data and spreads that may be overly complicated because they are the result of a corporate reorganization.
Because call spreads with high theoretical returns often have strike prices well above the current stock price, the probability of achieving the theoretical return is often low.
Call Spread Investigator is intended to provide you with information and educational data and ideas. The ideas provided by Call Spread Investigator are not recommendations and you should not act on them as such. The Call Spread Investigator strategy and the ideas it generates may not be suitable for your portfolio or financial situation. If you decide that you would like to execute an idea that is shown in the Call Spread Investigator, the tool has a trade button for your convenience, but you will be solely responsible for the applicable trading decision.
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