Signal Tutorial

What an alert is, and what it is not

Every alert describes a setup we are watching before the opening bell. It is a guide, not an instruction. Nothing in an alert tells you to buy, and no alert knows what your account can afford or what your risk tolerance is. You decide whether to take a trade, how much to commit, and when to close it.

These are momentum day trades. They are not swing trades and they are not investments. Positions are intended to open and close inside the same session, and short-dated options can move very quickly — in both directions.

An example alert

This is an illustration, not a live or historical trade. Prices are invented to show the format:

$EXMPL CALLS

STRIKE $175

EXP 08/21/2026

POTENTIAL ENTRY
BREAK & HOLD ABOVE 176

TARGET
181

STOP LOSS MAX 30%

CALLS and PUTS

CALLS express an upward thesis. We are watching for the underlying stock to move higher, and a call option gains value as it does.

PUTS express a downward thesis. We are watching for the underlying to move lower, and a put option gains value as it does.

The direction of the alert and the direction of the entry trigger always agree: calls pair with a break above a level, puts with a break below one.

Strike

The strike is the price level the option contract is written against. In the example above, $175 identifies which contract the alert refers to. Use the strike exactly as published — a different strike is a different contract with different behaviour, and it is not the setup we described.

Expiration

The expiration is the date the contract expires, shown as EXP 08/21/2026. Together, the ticker, calls-or-puts, strike, and expiration identify one specific contract. All four have to match.

Short-dated contracts lose value as time passes, and that decay accelerates near expiration. This is one reason these setups are intended to be same-day trades.

Potential entry: BREAK & HOLD

The entry line names a price level on the underlying stock — not on the option — and the direction it must be crossed.

BREAK & HOLD ABOVE 176 means we are waiting for the stock to trade above $176 and stay there. The two words matter separately. The break is the crossing. The hold is the requirement that it not be a momentary spike that immediately reverses.

For PUTS, the same logic inverts: BREAK & HOLD BELOW a level means waiting for the stock to trade under it and stay under it.

The one-minute confirmation

We treat a level as broken and held when a one-minute candle closes beyond it. If the entry says ABOVE 176, that means a one-minute candle closing above $176 — not a wick that pokes through and falls back.

This is a deliberately simple confirmation, and it is a judgement call rather than a guarantee. A level can close beyond and reverse anyway. Waiting for the candle to close is what separates a break from a blip; it does not remove the risk.

Target

Going forward, alerts include a TARGET — a price level on the underlying that marks where we thought the move could reach.

A target is a reference point, not a promise and not an order to hold until it prints. Many moves stall short of the target. Some run past it. You are free to take profits before a target is reached, and often that is the more sensible choice.

STOP LOSS MAX 30% — read this carefully

Every alert carries STOP LOSS MAX 30%. This is the most misread line in the format, so it is worth being blunt about:

30% is a maximum tolerable loss, not an instruction to hold a losing trade until it is down 30%. It marks the outer boundary of the risk we consider acceptable on the option premium. If a trade is not working, you do not have to wait for it to reach that boundary before closing. Cutting a trade earlier is always permitted.

Treat 30% as a line you should never cross, not a level you should ride down to.

Taking profits is your decision

We do not publish exit alerts. Once a setup triggers, managing the position is yours.

As momentum develops, you may take profits at any point, and you may take them in stages rather than all at once. A trade that is up meaningfully and starting to stall is a reasonable place to reduce or close, regardless of whether the target has been reached. Momentum in short-dated options can reverse in minutes, and unrealised gains are not gains until you close.

You must watch the chart

Alerts are published before the open. They do not update, and no alert knows what happened after it was sent.

Using them requires you to watch the underlying, recognise whether the break-and-hold actually occurred, and manage the position yourself. Some familiarity with basic technical analysis is effectively a prerequisite. If that is new to you, start with the 7-Day Crash Course.

Paper trade first

If you are new to options, or new to this format, trade it on paper first. Follow the alerts in a simulated account until you can read the entry, act on the confirmation, and manage an exit without hesitating. Stay on paper until that feels routine. There is no time limit on this and no advantage to rushing it.

Position sizing

Risk a small, fixed fraction of your account on any single trade. A common conservative guideline is no more than 1–3% of your account per trade, and smaller while you are learning.

Short-dated options can lose most of their value in a single session. A position size that would hurt if it went to zero is too large.

Risk disclosure

Options trading involves substantial risk of loss and is not suitable for every investor. Nothing on this page or in any alert is financial, investment, or tax advice, and nothing here is a recommendation to buy or sell any security. Past results do not predict future results. You are solely responsible for your own trading decisions. See our Terms for the full disclosure.