05Understanding scores & grades
OptyTrades uses two complementary scoring systems. Think of them as answering two different questions:
Quality Score (0–100%)
“Is this a quality company?”
The Stock Score evaluates pure fundamentals only — profitability, P/E ratio, EPS growth, analyst consensus, 52-week price position, beta, and dividend. Implied volatility and options data play no role in this number.
One quality gate applies before the final score is calculated:
- Falling Knife (drawdown ≥40% from 52-week high) → capped at 55. A stock in freefall is not a safe candidate for assignment.
| Score | Rating | What it means |
|---|---|---|
| 75+ | Strong | Excellent wheel candidate. Strong fundamentals across the board. Start here. |
| 60–74 | Good | Solid candidate with minor gaps. Worth investigating — check the detail view. |
| 45–59 | Mediocre | Mixed signals. Notable weaknesses in at least one area. Proceed carefully. |
| <45 | Weak / Avoid | Significant fundamental concerns. Usually poor earnings, extreme valuation, or falling-knife pattern. |
Wheel Grade (A+ through F)
“Is right now a good time to trade options on this stock?”
This letter grade is completely separate from the Stock Score. It evaluates the options market only — four factors: options chain liquidity, IV rank (is premium elevated vs history?), earnings proximity (risk of a vol crush), and bid-ask spread quality. Financial health, Piotroski, DCF, and analyst data feed the Stock Score’s deeper analysis, not the Wheel Grade.
| Grade | What it means |
|---|---|
| A+ / A / A- | Excellent conditions — high IV, deep liquidity, tight spreads, strong balance sheet. Great time to sell options. |
| B+ / B / B- | Good conditions — most factors are favorable. Minor gaps but generally fine to trade. |
| C+ / C / C- | Average — acceptable but not ideal. Consider waiting for better conditions or accept lower premium income. |
| D+ / D / D- | Below average — weak options market or financial concerns. Be very selective. |
| F | Poor — illiquid options, wide spreads, or serious red flags. Avoid trading options on this stock right now. |
How to use both together
High Score + Good Grade
The ideal setup. The stock is a great wheel candidate AND current conditions are favorable. This is your sweet spot.
High Score + Low Grade
Great stock, but bad timing. Add it to a watchlist and wait for conditions to improve (higher IV, tighter spreads).
Low Score + Good Grade
Tempting premiums on a weak stock. This is a trap — great premiums exist because the stock is risky. Skip it.
Low Score + Low Grade
Nothing good here. Move on.
Assignment Quality (AQ)
“Would I actually want to own 100 shares of this at assignment?”
Assignment Quality is a 0–100 composite score that sits alongside the Quality Score and Safety Badge. It focuses specifically on the risk of holding the stock through assignment — a concern the Quality Score doesn't fully address on its own. AQ weighs seven factors:
- Profitability (30 pts) — Consistent profitability across multiple periods.
- Drawdown (20 pts) — How far the stock is from its 52-week high. Deep bear territory gets penalized heavily.
- Market cap tier (15 pts) — Larger companies are more stable through assignment.
- Valuation (10 pts) — Extreme P/E ratios mean more downside risk if sentiment shifts.
- Beta (10 pts) — Lower beta = more predictable price behavior when holding shares.
- Sector (10 pts) — Core sectors (Tech, Healthcare, Financials) score higher than volatile or cyclical ones.
- Dividend (5 pts) — A dividend bonus rewards stocks that pay you while you wait for the stock to recover or be called away.
AQ ≥ 60 is the gate for our curated wheel watchlists. Stocks below 50 are generally not appropriate for the wheel — the assignment risk is too high.
Safety Badge
In the stock detail view, a Safety Badge appears alongside the Quality Score and Options Grade. It runs 7 binary pass/fail checks on company health: profitability, valuation sanity, market cap, IV level, free cash flow, share dilution, and solvency.
| Badge | Checks Passed | What it means |
|---|---|---|
| 🟢 Fortress | 7 / 7 | Rock-solid. Safe to hold through assignment. |
| 🔵 Solid | 6 / 7 | One minor gap. Still a strong candidate. |
| 🟡 Caution | 4–5 / 7 | Notable concerns. Investigate before trading. |
| 🔴 Danger | ≤ 3 / 7 | Serious red flags. Think twice before selling puts. |
The individual checks are listed in the Score Breakdown section so you can see exactly what passed and what failed. A stock with a high Wheel Score but a Danger badge is a trap — the premiums look great because the market is pricing in real risk.
Score Breakdown
At the bottom of the detail view, you'll find the Score Breakdown section. This shows every individual factor that went into both scores — with the points earned, the maximum possible, and a bar chart showing the percentage. Look for red bars to quickly spot weak areas.
Click Deep Analysis at the bottom to see a detailed summary of the stock's strengths, concerns, and an overall verdict. For a quicker take, the Verdict synopsis above the breakdown gives you the bottom line in one paragraph.