Brutus Options Ranker Frequently Asked Questions
Why use an Options Ranker vs. an Options Screener to find your next best options trade? We understand the approach is novel and you might have questions.
Why haven't you posted any performance details of your strategy? Seems fishy...
What we find fishy is when sites claim certain performance for a strategy. Often these results exclude commissions, are based on theoretical prices and not execution prices, and cannot include trade adjustments and rolls. Many newsletter services that tout performance details are simply misleading investors with unverified results for the sake of subscriptions.
Furthermore, OptionAutomator does not provide a 'strategy’ against which to post performance. Brutus mechanizes your strategy by applying the Multi-Criteria Decision Making (MCDM) rankings against it. Don’t have a strategy yet? No problem! We’re working with education partners to provide ‘out of the box’ strategies you can try. Add in our distilled directory of the very best educational resources to help you learn how to manage the trades Brutus discovers and you’ll be off to a great start!
Seems complicated. Isn't Brutus just chasing pennies on various contracts.
What’s wrong with chasing pennies? Many option contracts are less than $1 in value (i.e., $100 premium per contract with the standard x 100 share multiplier of the contract). An extra 10 cents in a contract could increase your returns by 10%.
"Chasing pennies" aside, many traders find the biggest benefit in using the Brutus Options Ranker is to automate your trading, remove trader emotion, and optimize the conflicting criteria in your strategy. More trades, more often, less headache!
Options trading seems like a lot of work. Can I really do this?
Let me share a personal story (from Drew our Co-Founder):
I’ve never been much of a sports fan (besides my college teams) and I found myself home for the holidays in 2008. My friends had the usual conversations about the latest games and their stats. Feeling a bit bored, I tried to change the topic to what was happening in the financial world and the markets. I got a little airtime (considering it was a huge financial crisis) but finally a friend asked me, “How can you spend all day and night staring at numbers?” I drew a parallel between their recent fantasy draft and "staring at trading numbers". See, the numbers come alive when you’re interested in what they mean! TastyTrade did an excellent piece on how much time the U.S. spends on fantasy sports and why they need to start trading.
At the end of the day, to each their own. You can be interested in fantasy sports, blackjack, options trading, or all three. But for me, it is incredibly exciting to manage options positions. They are dynamic and can make you money!
OptionAutomator’s mission is to make the process much simpler with the Brutus Option Ranker. Yes, you’ll have to manage your trades. But, you will no longer need to sort through endless option chains looking for your next trade and you’ll know your trading consistently and mechanically (the key to option trading success).
Will you provide options trading education?
OptionAutomator does not provide comprehensive options trading educational services. Instead we focus our energy to bring retail options traders the very best technology to improve their trading and help bridge the gap between Wall Street and Main Street.
We believe there currently isn't an effective and trustworthy source for options trade discovery. Current Options Screeners are too basic to provide useful, relevant results. We intend to close this gap. We’re happy to leave money on the table and provide free education sparingly through content we generate and via partners. By focusing on technology, we’ll provide the best options screener service for you – we're also working on some other great tools to take your options trading to the next level.
Why focus on U.S. Markets? Any plans to bring to other markets?
OptionAutomator has decided to initially launch the Brutus Options Ranker for the U.S. Options Markets.
The U.S. Options Markets by far have the most liquidity (volume) available for options traders. Liquidity is extremely important to ensure you get the best pricing and you can easily get in and out of trades.
Multi-Criteria Decision Making can be applied to all sorts of option instruments and therefore we are looking to bring this application to other markets down the road. Make sure your account reflects your citizenship and we will notify you when plans are being made to enter your market. Our hope is to make the Brutus Option Screener available to all!
I don't live in the United States. Can I still use Brutus from OptionAutomator?
Absolutely! Our initial launch will be for U.S. traded options. Traders or new traders not residing in the United States can still trade U.S. markets. We posted a detailed explanation of how to access U.S. Options Markets when living abroad in our blog. We want to make the Brutus Option Screener available for everyone!
Isn't options trading really, really risky?
Most beginners use options in really, really risky ways! And nothing makes us more upset than all the ‘get-rich-quick’ schemes out there on the Internet.
Options are levered instruments. Meaning that you can easily trade more money than you have. Visit the legal section of this website to familiarize yourself with the disclosure of risks when trading options.
Make sure to keep yourself out of trouble. Understand the risks and avoid fantastical claims littered across the internet from autotrade and newsletter services.
Now that irresponsible trading is out of the way, it is important to note that options can be used in ways that are far less risky than stock investing or mutual fund investing.
Our belief is that risk management should primarily be handled at trade entry. This can be achieved by never trading too large and having an exit plan. This is where a small amount of education comes into play. The temptation to trade too large is most strong when you don’t have enough trades to put on – OptionAutomator's Brutus Options Ranker solves this problem.
How did you come across MCDM? I haven't heard of it being used in options trading before.
Both our co-founders have experience in the Oil and Gas Industry. Drew was working on a project for a new oil platform. This is an incredibly costly and illiquid decision (billions of dollars). Once you make your decision it's extremely difficult and costly to change the decision.
There’s a framework we used called ‘Decision Quality.' It’s an assurance process to make sure we’re making the right decision with the billions of dollars. While the framework is multi-faceted, a critical piece of this decision framework was based on MCDM. Then the idea came – if this framework is good enough for multi-billion dollar decisions, couldn’t this be applied to my option trading. The answer is yes! The largest companies all over the world are already applying this framework.
These frameworks are always applied, as it is time consuming and difficult to quantify the inputs when little information is known (especially in early stages of the project). In the Options Trading Universe that information is available, real-time, and numerical. A true call for automation!
Why would I trade options when I could just have a money manager look after my savings?
Mutual funds and Money Managers usually (we won’t go as far to say all) have only one interest in mind: Make money! How do they make money? Taking fees! The truth is most funds and managers do not even beat the indices (before fees) like the S&P500.
An entire industry has emerged to rip off the common person by telling them that trading is too complicated and insisting they put their life savings in funds that take up to 1% per year. This infuriates us!
Now, some hedge funds certainly outperform the market (many use options among other instruments), but they are only available to ‘qualified investors’ (read rich investors) and have strict membership requirements.
How can I be confident that I can translate my strategy effectively so Brutus can apply MCDM against it?
Brutus leverages a proprietary modified mathematical framework within the field of MCDM which is most suitable for options trading.
Within this framework there is a method to calculate a "consistency ratio," which effectively measures how logical the input is when weighing the different criteria used.
A bit too technical for this section, but essentially if you ranked criterion 1 twice as important as criterion 2 and criterion 1 three times as important as criterion 3 but then ranked criterion 2 more important than criterion 3 then Brutus would prompt you that your logic is inconsistent and work with you to fix it.
While it might take a little time to get your strategy just right, Brutus is a quick learner and he'll be up and running, finding your best trades, in no time. Best of all - once you've set your strategy once, you don't need to be behind your computer at all to find your next best, most relevant options trade.
Still have questions?
Ask it here and we will get you an answer