What Is the Best Options Trading Advisory Service?

Updated on November 16, 2018
Daniel Mollat profile image

Daniel is a retired business executive who now devotes most of his free time to trading stocks and stock options in the stock market.

For those who are not familiar with stock and option advisory services, also called pickers, these are online services that offer to pick stock or options for clients based on the clients’ investment goals. I mention only stocks or options in this article since these are my investment specialties. But I’m sure there are also mutual fund pickers, bond pickers, and pickers for futures, forex, commodities, indexes, and others.

For this article, I will only be talking about stock and option pickers. While they basically offer the service of picking stocks or options according to the investment objectives of their clientele they prefer to call themselves advisory services rather than pickers. In effect, they do serve the function of advising the client what stock or options to buy or sell.

They are not to be confused with licensed financial advisers.

Licensed financial advisers are licensed professionals who are regulated by local or national governmental agencies and/or are certified practitioners. Investopedia.com defines financial advisers as:

“A financial advisor or adviser provides financial advice or guidance to customers for compensation. Financial advisors can provide many different services, such as investment management, income tax preparation and estate planning. They must carry the Series 65 license to conduct business with the public; a wide variety of licenses are available for the services provided by a financial advisor.”

A financial adviser therefore offers its client a package of services whereas a picker offers only the service of picking a particular stock or option on a particular industry or segment of the stock market. For instance, an investor may wish to find a stock to buy in the oil drilling industry. He goes online and searches for stock pickers or advisory services that specialize in recommending stocks in the oil drilling industry. In the same way the investor who wishes to invest in banking stocks can find stock pickers specializing in banking stocks.

In the case of options, since there is a multitude of strategies employed in trading options, option pickers do not normally specialize in any industry but rather more on the trading system being employed by the advisory service. For instance there are advisory services that specialize in selecting straight buying or selling of options. This is known as directional trading, betting on the market’s direction, whether up or down. This option strategy is called going long (for buyers) or going short (for sellers). Another picker may specialize in selecting options for covered call selling, another may use spread trading, or any of the dozens of other trading systems available in the options business.

The Role of The Advisory Service

What exactly is the role of the so-called advisory service? In short, they are supposed to find and recommend the right stock or option that will provide the desired result sought by the client. They also signal when to enter and exit a trade or in some cases, the picker also signals adjusting trades to existing open positions.

In what way do they claim to do a better job of selecting winners?

They claim to have extensive experience in the trading system that is being offered on their site. Additionally, they claim to have all the necessary tools such as advanced computer software technology, algorithms and deep research materials that enable them to do a much better job of locating the right stocks and options. Admittedly they do not claim to be always right in their selections, only that they will do a better job of finding the best potentials most of the time.

Exercise Caution in Selecting Advisory Services

If you choose to use a stock or option advisory service you must be extremely careful in your choice. Pickers, or advisory services can be very deceiving in their online presentations to lure prospective clients to their services. Many, in fact, most of them, exaggerate their successful trades or wins when they present their track records or performance results. They are always quiet on the number of unsuccessful or losing trades

They employ various ways to present a very favorable track record with the sole purpose of deceiving the visitor into believing their numbers. Many don’t even show track records on their websites and these, in my opinion, are the ones that should be avoided immediately in your search for an advisory service.

Especially, don't be misled by their client testimonials. Please see my other article on the subject of testimonials.

That said, it does happen that a picker may, in fact, be a good one even if it shows no track record in its website. The only way to know about them is by word of mouth from someone who has already tried them successfully. Don’t get me wrong. There are a few that really do render a valuable service. It’s just a matter of finding them

So, how does one go about finding a good picker? I’m afraid it’s a hit or miss system. For stocks you can google ‘stock picking service’ or ‘stock advisory service’ and you will come up with quite a selection. For options, you can do the same thing. Google ‘options trading advisory service’ ‘option picking service’ or ‘stock options advisory service’

Source

Since my specialty is stock options I may be a little more help in this area. In January of 2017, I decided to do a study of the various option picking services to see which ones were worth subscribing to. Using Google to do my search I found several online sites worth investigating. There were actually more than two dozen option picking sites but only a few met the criteria for my study. I subscribed to more than a dozen of the services but eventually narrowed my selection as it was getting too expensive to follow them all.

I selected ten of what I believed to be the more trustworthy ones and followed their various trading systems. I traded their signals whenever I could but some of them required full immediate access to a computer when the emailed signals came through. I tried to chase those signals that I missed and in so doing I often did not get the same fills they did. This is a drawback for those who cannot be constantly watching up-to-the-minute pickers’ signals. The trading results shown in the table are those that I actually traded myself whether following up-to-the-minute or late signals.

List of Preferred Option Picking Services

The trades column are the number of trades I did following the signals that were given by each picker. The next columns show the number of winning and losing trades as well as the net dollar gain or loss resulting from the total trades for that picker. In order to make the comparisons fair and meaningful, I invested the same amount - $1,000 - on each trade.

As you can see from the table, except for three pickers, all listed pickers delivered losses. Looking at the numbers, OptionAlarm appears to be the clear winner in terms of dollar values even though the number of winners exceeded the losers by just one trade. What this means is that the winning trades produced higher percentage wins than the losing trades.

ThePutSellingGroup came in as a strong second and produced almost the same level of profits. It is a clear first placer in terms of the number of winning trades with a 65.7% winning ratio. Their high winning percentage is due to the fact that they employ a more conservative and safer option trading system, thus a lesser number of losing trades.

Steady Options came in a far third. Like PutSellingGroup this picker offers a very conservative and safe trading system but is difficult to follow if you are just following option picks. They require a deep knowledge of the system they use and in most cases leaves it up to the client to decide when and how to enter and exit their selected options.

I haven’t seen a similar study of actual trading performances by individual options traders like myself. All that we see in the web are trading performance results put out by the option pickers which, as I mentioned before, can be very deceptive.

There are good and bad stock and option pickers, unfortunately, the bad ones seem to outnumber the good ones by a large margin. But for an investor who does not have the time to do detailed research on which stocks and options to invest in, the right picker can offer a valuable service in leading him to the right selections

Updated List of Option Pickers

In the early part of the year (2018) I thought it would be interesting to see how some of those on the original list fared in another six months of trading. I also added two new pickers to the list. I again subscribed to all the services in the new list for another round of actual trading comparisons. The table below shows the results of this survey.

2nd Survey, April - October 2018

Option Pickers
Trades
Wins
Losses
Gain (Loss)
Percent Winners
Period
OptnAlarm
43
23
20
$4,585
53.50%
6 mos
OptionGenius
32
16
16
$1,232
50.00%
6 mos
MT Options
64
34
30
$779
53.10%
6 mos
SimonSaysOptions
8
4
4
-$32
50.00%
6 mos
Options Money Machine
22
11
11
-$86
50.00%
6 mos
options-intelligence
10
5
5
$1,942
50.00%
6 mos
TheOptionSellingGroup
51
33
18
$7,216
64.70%
6 mos

I didn’t include SteadyOptions.com because I’ve concluded they are clearly a very good option advisory service and needs no further testing. I say this despite the fact they didn't make a high mark in the first series of comparisons. They have a safe but complex trading system but as mentioned earlier they are difficult to follow if you are not very well experienced in the many options strategies they recommend.

Those that I’ve omitted in this updated study do not necessarily indicate they are not reputable. It’s just my personal choice to continue the study with a set of advisory services that I believe may be worthy of further testing. It’s expensive to be subscribing to all the services all the time.

NOTE: The PutSellingGroup is in process of building their website which should be up and running by mid-November 2018. If you wish to be notified when they are online contact me to be included in the to-be-notified list.

Staying at Your Computer is Critical

One thing to keep in mind is the time you spend in front of your computer. Many, in fact, most of the options pickers will send out their email signals any time during stock market hours. If you are not at your computer when their emails come in and you are not able to do the trade immediately it is often too late to try and catch up. The option may have already moved significantly against the signal. This has happened to me several times and when I tried to chase the trades they became losers. This condition predominantly applies to those following signals from pickers who specialize in directional trades such as buying calls and puts.

This case of needing to be quick in executing options signals may not be as critical with some option trading systems. Spreads, selling calls/puts, condors, butterflies, etc. are not so time sensitive. I have missed this kind of trade signals from late emails but by placing a “good-till-canceled” order I often was able to chase and get the price indicated by the signal. Or, if I can’t get the exact price of the signal, a close match to the price will work out fine in most cases.

Investor Poll

Have you or are you subscribed to any advisory service?

See results

Note:

Any and all information pertaining to trading stocks and options including examples using actual securities and price data are strictly for illustrative and educational purposes only and should not be construed as complete, precise or current. The writer is not a stockbroker or financial advisor and as such does not endorse, recommend or solicit to buy or sell securities. Consult the appropriate professional advisor for more complete and current information.

Questions & Answers

© 2018 Daniel Mollat

Comments

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    • Daniel Mollat profile imageAUTHOR

      Daniel Mollat 

      4 days ago from Nevada

      I'm glad to hear you're doing well with OptionsByPros. I'm not familiar with them but from what I see at their site they are a directional option picker.

    • MarkTatom profile image

      Mark Tatom 

      4 days ago from Boston, MA

      I use OptionsByPros.com and their day trades are the best. I've made serious money this August - to Nov with their option trades. They use a point system which is unique and have a live chat full of traders with knowledge.

    • profile image

      Daniel Mollat 

      3 months ago

      Doug, thanks for posting a comment but the best stocks options service depends a lot on the trading system you wish to pursue and your risk tolerance. This article only gives you some thoughts on those I have explored. There are many others I'm not familiar with.

    • profile image

      Doug Smith 

      3 months ago

      What are the best stock options trading services?

    • profile image

      Kim Klaiman 

      5 months ago

      Dear Daniel,

      We are honored to be among the only two profitable services.

      There are few things worth mentioning:

      First, based on our records, you were our member for only 3 months. As you mentioned, it takes time to learn our trading system, and members who stick around usually improve their results significantly over time.

      Second, it is important to compare apples to apples. You mentioned that "In order to make the comparisons fair and meaningful I invested the same amount - $1,000 - on each trade." This still doesn't make the comparisons fair. Why? Because the risk is completely different.

      Looking at the track record of the first ranker, you can see that around 25% of their trades are 100% losers. In fact, it is not uncommon for them to have five consecutive 100% losers.

      Imagine you joined in February 2017 and allocated 10% of your account to each trade. Two months later, your account would lose 50%. While the overall track record is indeed impressive, you just cannot ignore the risk.

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