How the Sizzle Index May Help | Long Options | 6-3-25

About this Video

• Video Title: How the Sizzle Index May Help | Long Options | 6-3-25
• Channel: Trader Talks: Schwab Coaching Webcasts
• Speakers: Brent Moors, Connie Hill
• Duration: 00:45:58

Introduction

This video explains the Sizzle Index and how it can be used to identify potential long option trades. The speaker, Brent Moors, along with Connie Hill assisting in the chat, demonstrates how to interpret the Sizzle Index, comparing current options volume to the five-day average, and provides examples of using it to find long call and long put opportunities in stocks like Microsoft and Abbott Labs. The video emphasizes that the Sizzle Index is not a predictive tool but rather an indicator of market interest.

Key Takeaways

• The Sizzle Index: Compares current options volume to the average volume over the last five days. A higher index indicates increased interest in a particular option, while a lower index suggests less interest than average.
• Interpreting the Sizzle Index: An index of 1 indicates current volume equals the five-day average. Values above 1 show higher-than-average volume, and values below 1 show lower-than-average volume. The index can be analyzed for calls, puts, or both.
• Using the Sizzle Index with Technical Analysis: The Sizzle Index can be used in conjunction with technical analysis (e.g., moving averages, Bollinger Bands) to help identify potential trades. High Sizzle Index values alongside bullish technical indicators might suggest long call opportunities, while a high put Sizzle Index with bearish indicators might indicate long put opportunities.
• Trade Strategies: The video demonstrates using the Sizzle Index to create long call and long put trades, including setting stop-loss and target prices, and utilizing OCO (One Cancels the Other) orders.
• Reward-to-Risk Ratio: The importance of considering the reward-to-risk ratio is stressed; aiming for a ratio greater than 1:1 is recommended to account for potential losses.