The Philosophy

What is a Theta Warrior?

A Theta Warrior is a trader who uses both technical analysis and options flow data to accurately and profitably time entries and exits within the market. We understand there are times when it’s ideal to be long, other times it’s ideal to be short, and also the power of being flat. The goal is to capitalize on market moves in any direction, without bias.

Theta (the rate of decline in value due to the passage of time) is an important metric to all options traders. Whether we are buying premium or selling premium theta has a powerful effect on our outcomes. Theta is a force that can be used to our advantage, or a detriment if we ignore it. Hence, why every successful trader must be a Theta Warrior.

Analyzing the Charts

Technical analysis is an important part of being systematic in our approach to trading. Determining where buyers and sellers will be waiting and understanding the psychology behind the price action all begins with learning the charts. As technical traders we want to have precise levels telling us when to enter, when to take a loss, and of course when to take profit. These levels can be based on support and resistance, moving averages, volume profiles, Fibonacci, etc.

Interpreting the Options Flow

The options market is a unique place where traders big and small coexist in the same arena. Thanks to modern technology, the opening and closing as well as the size of every options trade is available at our fingertips. Monitoring the “flow,” as it’s aptly named, can give us insight into which way the big players are pushing the market. As traders we never want to go against the market, so we look to use the flow to confirm our trading thesis before an entry. If it conflicts with our thesis, we want to know about that as well.

Strategic Positioning

A major part of trading is knowing when to add risk and when to sit out and protect your chips. If the market is conflicting our thesis for the setup, often it’s best to wait for confirmation, or at a minimum reduce size. Having the discipline to sit and wait for the opportune moment can be the difference between failure and success. Plan the trade and trade the plan!

A Successful Trader Needs:

  • Focus
  • Discipline
  • Commitment
  • Perseverance
  • Ability to take a loss
  • Control over emotions
  • Tolerance to taking risk
  • Personal strategy (a plan)

Just to name a few!