id: medaillen-ranking title: Metric evaluation & sorting locale: en ---
Metric evaluation: how is the score built?
Every ranked contract candidate carries a score. That score is the basis for sorting the chain for the given expiry: candidates with a higher score are placed further up. The sorting is a neutral aid for overview – not a buy or sell signal and not a selection recommendation.
The formula distinguishes between puts (cash-secured puts, which collect premium and may lead to shares being assigned) and covered calls (which collect premium on shares you already own).
For puts you can choose between two metric models: classic or annualized. For covered calls there is only one model.
Where do I switch?
Dashboard → "Account & Security" area → card PUT ranking model → radio choice → Save.
The change is applied immediately. On the next load of any candidate view (companies, chains, wheel screener) the new model is used for sorting.
Model 1: "Classic" – premium points
Target audience: users who prefer simplicity and follow a fixed premium target per trade (e.g. at least 1.5 % premium relative to strike).
Score: 0 to 110.
| Building block | max. pts | What it measures |
|---|---|---|
| Premium | 40 | Premium relative to strike, against a fixed target: 1.5 % for PUT-L1 (no stock held), 0.8 % for PUT-L2 (with stock). 100 % of target = 40 points. |
| Safety cushion | 25 | Distance of strike below spot, in volatility units (ATR52). Peak at 2.5 units below spot. Too close or too far reduces points. |
| Liquidity | 20 | Total open interest in the contract. 1000+ = full. Below 500 the contract is marked with a warning chip later in the list. |
| Expected volatility | 15 | Implied volatility (IV) – a high value means the market prices strong moves. 50 % IV = full. |
| Volatility bonus | 10 | Bonus if the market prices more daily movement than the stock actually delivers (Rule-of-16). |
Property: days to expiry (DTE) do not factor in directly. A 7-day contract with 1 % premium and a 45-day contract with 1 % premium get the same premium points, though the short one would have a higher yearly return when extrapolated to a full year.
Model 2: "Annualized" – yearly return on secured cash
Target audience: users who want to normalize contracts across different expiries onto the same horizon. 7-day, 30-day and 45-day contracts are made comparable.
Score: 0 to 110.
The core figure
$$
\text{Expected yearly yield} \;=\; \underbrace{\frac{\text{premium}}{\text{strike}}}_{\text{return per trade}} \cdot \underbrace{\frac{365}{\text{DTE}}}_{\text{extrapolated to 1 year}} \cdot \underbrace{(1 - |\Delta|)}_{\text{probability of keeping the premium}} $$
In plain language:
- Return per trade: what you collect, divided by the cash the trade
blocks in your account.
- Extrapolated to one year: instead of "1 % over 7 days" we look at
"what would this be if it kept running all year?".
- Probability of keeping the premium: an options metric called
delta approximates the odds that the stock stays below your strike at expiry (in which case you keep the full premium). A delta of 0.20 roughly means: with ~80 % probability the premium stays yours. If delta is unknown it is estimated from the safety cushion (ATR52).
The point scale
| Building block | max. pts | What it measures |
|---|---|---|
| Expected yearly yield | 60 | The core figure above (annualized and probability-weighted). 30 %/year = full. |
| Liquidity | 20 | Open interest. 500+ = full. |
| Expected volatility | 15 | Implied volatility. 60 % IV = full. |
| Volatility bonus | 15 | Same as in classic. |
Property: 7/30/45-day contracts are normalized onto the same horizon. A short trade with high annualized yield therefore gets a higher metric than a long one with tiny yield.
Example (showing the difference)
Two puts on the same underlying (stock at $100):
- Contract A: strike $95, premium $1.50, 45 days to expiry.
- Contract B: strike $95, premium $0.50, 7 days to expiry.
| Figure | Contract A | Contract B |
|---|---|---|
| Premium / strike | 1.58 % | 0.53 % |
| Extrapolated to 1 year | 12.8 % | 27.4 % |
| Probability of keeping premium | 70 % | 85 % |
| Expected yearly yield | 8.96 % | 23.3 % |
Result:
- Classic model: Contract A gets the higher score (larger absolute
premium → full 40 premium points).
- Annualized model: Contract B gets the higher score (the short
trade frees up capital faster for the next trade).
Both views are valid. Which one fits you depends on whether you sort by "largest absolute premium per trade" or by "largest return per euro of capital per year".
Model for covered calls (only one)
For covered calls the gain if assigned is already baked into the formula – a separate "annualized" model is not needed.
Score: 0 to 100.
| Building block | max. pts | What it measures |
|---|---|---|
| Premium | 30 | Premium relative to stock price. 0.6 %/trade = full. |
| Gain if assigned | 30 | (strike − stock cost basis) / cost basis. If the stock is called away, that is your capital gain. 5 % cushion = full. |
| Safety cushion | 20 | Distance to spot in volatility units (ATR52). |
| Liquidity | 10 | Open interest. |
| Expected volatility | 10 | Implied volatility. |
Where do I see the explanation in the UI?
Anywhere a score is shown (companies quickview, option chains, wheel screener), a small ? icon sits next to it. Clicking it opens a window with:
- which model is currently active,
- which building blocks made up the points,
- the concrete intermediate values for this contract (for annualized),
- a link to this doc and to switch the model.
Legal note
The score is an algorithmic sorting aid. Not a buy signal, not a sell signal, not investment advice, not a recommendation. It does not replace your own review of market data and news on the underlying company.