What is a Market Group in the Brutus Options Ranker?
Market groups are static or dynamically generated lists of underlying tickers (stocks & ETFs). The market group will be used to make options trading alternatives to be evaluated in your strategy. The Brutus Options Ranker will only use underlying stocks and ETFs from the group you select to create options trading alternatives for ranking.
The market groups used by the Brutus Options Ranker provide you a way to focus Brutus’s ranking process. Brutus will use the group of underlying stocks and/or ETFs that best matches your strategy’s overall objectives.
Why Rely on Market Groups Instead of Screening the Whole Market?
Market groups ensure a lot of the “junk” is filtered out before making it into the ranking process.
We have a number of pre-defined groups that work well with options. Also, you will soon be able to use dynamic market groups (premium feature) which change based on market conditions. Finally, in the near future we’ll be introducing customizable static and dynamic market groups to give you full control over which stocks you would like to scan for options.
OK, I Get It. How do I use the Market Groups?
You will find several predefined market groups in Brutus. Here are a few examples:
Dividend-Paying Market Groups
The ‘Dividend Aristocrats’ Market Group is a group of stocks that have paid dividends every quarter for the past consecutive 25 years or more.
Albeit, this Market Group is an elite group of underlying stock that have the strong dividend performance. Your may also want to consider the ‘Dividend Domination‘ market group to further expand your options.
The more robust ‘Dividend Domination’ Market Group containing 78 stocks, all which pay dividends.
Similar to Dividend Aristocrats, this Market Group works very well with the Short Puts Setup type.
Dividend-paying underlying stocks and ETFs tend to have lower volatility. It’s important to consider this when using dividend options trading strategies.
OK, We Like Dividends – Here are Other Market Groups
The Liquid ETFs group contains ETF underlying with good liquidity and listed options.
ETFs are great trading instruments as they are inherently diversified. This market group is a great option for traders with a small account, where diversification is difficult.
Why “Liquid” ETFs in the name of this group? Because finding good liquidity both in the ETF and underlying options is no small task. This is also a fairly small group.
Finally, a ‘Technology’ Market Group of 25 stocks with great liquidity and higher volatility among the several other groups.
Many traders and investors love technology stocks. This can be a great Market Group to run your strategy on as it contains many familiar household names.
This Market Group also works great paired with high-volatility options trading setups such as Iron Condors, Straddles, and Credit Spreads.
I Still Want to Scan the Entire Options Market…
We understand… you want to scan it all. You can also choose the “All Underlying” Market Group.
This is a group of all available underlying stocks and ETFs that will work with the Brutus Options Ranker.
Note that the “All Underlying” market group changes from time to time. The group was specifically limited to 100 of the most liquid and suitable stocks and ETFs for options trading during the private beta. This list will soon be expanded to 300+ stocks and options which posses the qualities we believe make great trading candidates.
You can choose the market group that best supports the criteria you plan to rank your options trading alternatives against. You will need to apply your market group when building a new options trading strategy or when customizing a template/framework strategy.
How to Navigate to and Set Your Market Group
From the Brutus Options Strategy Builder’s Strategy Tree View click on the icon on the left labeled “Market”. Note – the Market Icon will be green if the market is set already on the strategy (you can still change it) and will be red if the Market Group needs to be set.
Upon clicking the Market icon, you will see a slide out window with the Market Groups available for your strategy.
You can explore the Market Groups available on this screen. Clicking a Market Group’s “View Details” Button will give you full information about the market group and the embedded underlying stocks and ETFs that are included.
When you are ready, you can apply any of the market Groups to your strategy. The next step will be to apply a Setup Type.