Poormans Algo

The following is chart of the Poormans algo created by Travis Lewis. You can find a full explanation of the algorithm on seeking alpha or on aaplpain.com. What the chart below shows is the result of the long-only side of the algorithm for the last 24 months. The algorithm which says the heavily traded weekly options become the tail wagging the dog, can be summarized as this.

Open Date
Open Price
Close Date
Close Price
Percent Change
Portfolio Cash Value
Portfolio Change
  1. AAPL options are opened at the beginning of the week. The MM writing the option buys the stock as a hedge and creates buying pressure.
  2. AAPL options are closed at the end of the week. The MM who wrote the options closes the stock hedge resulting in selling pressure on the stock.

To take advantage of this trend, the algorithm states simply that you should buy the stock at the market close on Friday when the option closing has driven the stock price down. You are buying low. Then, you sell the stock 4 days later at the market close on Tuesday. Option contract buying has created buying pressure and driven up the stock price. Travis argues this provides better returns than a buy & hold strategy while reducing risk from 7 days per week to 4 days per week.

Daily Newsletter
Enter your email address to get the free option screener





Google Plus


Recent Tweets
Wednesday, May 16, 2018 11:45 PM
$QQQ open interest for maturity 05/18/2018. High put=0.00 High call=170.00 #maxpain #options https://t.co/Nw40GZpLX2
Wednesday, May 16, 2018 11:40 PM
$CCI Max Pain=105.00. Maturity=05/18/2018. #maxpain #options https://t.co/RLqYMrqLit
Wednesday, May 16, 2018 11:35 PM
$CDNS high OI range is 36.00 to 47.00 for option expiration 05/18/2018 #maxpain #options https://t.co/0J4vLRVHNt
Wednesday, May 16, 2018 11:30 PM
$PNR Max Pain is 70.00 for maturity 05/18/2018. #maxpain #options https://t.co/2ftwPhc5Ne
Wednesday, May 16, 2018 11:25 PM
$MDT open interest for maturity 05/18/2018. High put=82.50 High call=48.00 #maxpain #options https://t.co/7w8JeiYKGR
Wednesday, May 16, 2018 11:20 PM
$PNW Max Pain is 80.00 for maturity 05/18/2018. #maxpain #options https://t.co/vnmBv9V0Wg