What To Look For In An Options Trading Alert Service

Last Updated February 14th 2023

7 Min Read

Options trading has become increasingly popular over the years, with more and more traders making use of these derivatives’ ability to manage risk, hedge bets, and secure profits without putting up nearly as much capital.

We’d even venture as far as to say that this new generation of investors, characterized by growing up in a post-2008 world and the GME saga has wholeheartedly embraced options. That isn’t just an unfounded opinion, however. Options trading broke volume records in early February of 2023, with more than 68 million contracts traded in a single day.

In light of this, the number of option alert services has also skyrocketed, providing traders with timely and actionable alerts that are designed to help them make informed decisions. But with so many options (pun intended) to choose from, it can be difficult to know which service to trust.

What Is An Options Alert Service?

An options alert service is a service that provides alerts or signals to traders that indicate the best times to buy or sell specific options contracts. These alerts are typically based on sophisticated algorithms and data analysis, which help traders make informed decisions in real time.

They can also be based on a more subjective analysis, such as the opinions of a team of expert traders. The goal of an options alert service is to help traders make better trades, minimize their risks, and maximize their profits.

Sounds good, right? It is - but make no mistake, not all options alert services are good - and neither are all of them legitimate. In the era of mass instant information, telling a good alert service apart from a bad one isn’t as straightforward as you might think.

What To Look for In A Trading Alert Service

When choosing an options alert service, there are several key factors to consider. These include the website, social proof, past performance, communication, method of sending alerts, and any additional resources or demonstrations of legitimacy. We will discuss each of these factors in detail.

The Option Alert Website

The website of an options alert service can provide valuable insights into the quality of the service. After all, the website is the first impression - and if something seems fishy at this stage, that’s probably due to a good reason.

It should be user-friendly, easy to navigate, and lack overtly promotional language. Remember - anyone who is honest can let the facts speak for themselves - anyone who sounds like a used car salesman usually can’t.

The addition of helpful educational resources, such as blogs, courses, webinars, newsletters, and videos is also preferable. This not only helps with the proper execution of simpler trading strategies but also allows traders to progress to more complex approaches at their own pace. The website should also demonstrate the service’s expertise, with clear explanations of the algorithms and data analysis used to generate alerts.

On top of that, there are various methods to ascertain the legitimacy of a website - from other websites that are dedicated to tracking ownership and domain age, to simply checking out and using the contact form - remember, illegitimate websites are very wary of using contact forms.

Social Proof

A large and engaged following on social media can be an indicator of the legitimacy of an options alert service. Be wary of services with large numbers of followers that appear to be purchased or followed by bots.

Look for services with a large, organic following that demonstrates real engagement, such as positive comments and shares from profiles that aren’t barebones upon closer inspection. In much the same way, social proof can be ascertained by paying close attention to reviews and the experiences of users posted online.

What’s Their Past Performance Like?

Past performance is the most straightforward way to gauge the success of an options alert service. However, it’s important to keep in mind that the methodology used to calculate past returns is also important.

In a vast majority of cases, the methodology is intentionally skewed to present an idealized picture - what would have happened had a trader bought and sold contracts at the absolute optimal times. This is very hard to replicate in real trading, no matter how skilled an investor may be.

What’s more, these stated “ideal returns” often do not factor in the costs associated with trading, such as platform fees and commissions. All in all, these figures should always be taken with a grain of salt.

Ideally, you want to find a service that has a consistent track record of success, and that aligns with your preferred style of trading or investing. If an options trading alert service has a track record of 70% returns but uses a method you are unfamiliar with, it is unlikely that you’ll be able to secure similar gains.

Always keep in mind alerts should be used as an addition to your trading arsenal, and not as the foundation of it - the ability to think on your feet and react quickly is still hugely important, so sticking with a strategy that you’re familiar with is still the best course of action.

Communication

A responsive and helpful customer support team is a must when choosing an options alert service. Many options trading strategies require a lot of supervision, and others require investors to be ready to react at a moment’s notice. In both cases, reliability is paramount.

A good, responsive CS team ensures that everything is running smoothly - and in the rare cases when a real issue does pop up, solving it quickly goes a long way in safeguarding both your nerves and your money.

Try reaching out to the service through their contact form to gauge their responsiveness and helpfulness. Additionally, it’s important to consider how customer support can be reached, via which means, and during which hours. Prompt replies to emails and filled-out contact forms are important, but we’re in the 2020s now - a fast, responsive live-chat option is what you’re ideally after.

How Do They Send Alerts?

To piggyback off of the previous point, the way that the alerts themselves are communicated to clients is another important factor to consider when making your decision. Different traders have different preferences for how they receive alerts. Most services offer alert delivery in one of the following ways: via e-mail, phone notification, and text messages.

Beyond simply picking your preferred method of delivery, it’s important to choose a service that offers multiple options for alert delivery, as this serves as an additional layer of reliability or a failsafe. This way, you can receive alerts in the way that works best for you.

On top of that, keep in mind that the frequency of alerts can also be an important point - if you’re used to a fast-paced, high-volume strategy, then an alert service that only pings you twice a week isn’t going to do much good. This is a significant drawback when it comes to receiving alerts for options trading. Many traders want a high volume of alerts from their provider - but what’s even more important is the rate of success with those alerts.

Do They Have Anything That Can Demonstrate Their Legitimacy?

One common element that is found in both scams and sub-par services is that while they might talk the talk, they’re generally light on evidence when it comes to walking the walk. However, this fact makes it much easier to differentiate between legitimate and illegitimate alert services.

In general, an illegitimate alert service won’t offer anything of value until you’ve already taken the bait - so the presence of something like a free newsletter or trial offer can demonstrate legitimacy. These resources can provide valuable insights into the quality of the service and the expertise of the trading team.

Conclusion

In conjunction with a sound strategy and proper risk management, a good options trading alert service is well worth the subscription price. This is, however, a highly-competitive field - and sorting the wheat from the chaff (let alone finding the most profitable service) requires quite a bit of analysis and comparison.

Only by taking into account factors such as past performance, investing strategy, alert delivery methods, legitimacy, and social proof can investors find the service that best suits their needs - and we hope our guide has helped make that job at least a little bit easier.