When Guy does the weekly watchlist, how come he doesn’t mention the OVI correlation to that stock?
Guy's main emphasis on his weekly reviews is the quality of setup and showing members the difference between the good, bad, or ugly.
Regarding the OVI correlation star ratings, when one looks at a stock like Apple (a regular 5 star stock over the years), it soon becomes clear that focusing on these type of stocks when they present AAA setups is a rather good strategy ... if you have the patience to wait for the right setup!
Not all 5 star stocks will be plums as some of them may not set up nicely very often, and some may not behave optimally with the shorter term (swing) retail discretionary time frames.
Remember, the star ratings are evaluated with no chart setup and no trading plan. This is a deliberate approach in order to avoid over-fitting.
However, in the retail discretionary world (our swing trading world if you like) we do add specific setups and a trade plan on top.
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Would you trade a stock, or an option, which doesn’t have any stars/low number of stars showing the level of correlation with the OVI?
No stars simply means that the stock is not in the S&P 500. The correlation score is a complex algorithm with a nuanced meaning. If presented with two choices, one with 1 star and one with 5*, then the better choice is more likely to be the 5*. ...
If a stock is a 1 star, does that mean that the OVI correlates with the stock 20% of the time, and if its’ 2 star, it correlates 40% of the time etc?
The stars are relative to each other. 5* means that for the latest period under examination (and the periods are not short term) a particular stock is in the top quantile of stocks that correlate with their own OVIs on an empirical basis. The ...
If there are no stars/low number of stars for a stock, then how can there be statistical integrity behind the OVI indicator?
No stars simply means the stock is not in the S&P 500. Low stars simply means that in a more recent segment of time, that the stock price has not correlated with its own OVI as well as other stocks have performed in the same time period. It is a ...
What is the OVI?
The OVI is Guy's proprietary trading indicator. It’s a unique tool that you won’t find anywhere else. The letters OVI actually stand for ‘Options Volatility Index’, and the technology itself relies on complex algorithms and billions of data ...
What does the OVI do?
Simply put, the OVI measures the flow of the big, smart money in the markets. It does this by monitoring the activity between buyers and sellers of options. You do not need to know anything about options trading to use the OVI. But by looking at ...