How to Use Options Trading Alerts: A Beginner’s Complete Guide
Stop staring at your phone wondering what to do when a trade alert hits your inbox. Here's exactly how to read, evaluate, and act on options trading alerts — even if you've never traded an option before.
Trading options can feel like drinking from a firehose. Tickers flying by, expiration dates approaching fast, and prices changing by the second. That's exactly why thousands of traders turn to options trading alert services — to cut through the noise and focus on high-probability setups that someone else has already identified.
But here's the thing most people don't talk about: receiving a trade alert and knowing how to use it are two very different skills. An alert is only as good as the trader acting on it. If you don't understand what you're looking at, even the best alert in the world won't help you.
This guide breaks down everything you need to know about using options trading alerts effectively — from understanding the anatomy of an alert to managing your position after you enter. If you're brand new to options, the SEC's investor guide to options is a solid primer on the basics before diving in.
What Is an Options Trading Alert?
An options trading alert is a notification — typically sent via email, text/SMS, or through a platform like Discord — that identifies a specific options trade idea. Think of it as a researched trade setup handed to you on a silver platter.
A quality alert from a service like Pure Power Picks includes the key details you need to evaluate and potentially execute the trade:
- The ticker symbol — which stock or ETF the trade is on
- Call or put — the direction of the trade (not sure about the difference? See our trading blog for a breakdown)
- Strike price — the price level the option targets
- Expiration date — how much time the trade has to work (learn more about how options expiration works at the OCC)
- Entry price range — what the contract costs at the time of the alert
- Profit target(s) — where to consider taking gains
- Trade thesis — the reasoning behind the setup
Without all of these components, you're flying blind. The best alert services include a detailed trade thesis alongside every alert so you understand why the trade makes sense, not just what to buy.
Breaking Down a Real Options Alert
Let's walk through what an alert looks like in practice so you can start recognizing the key elements.
Thesis: Apple approaching key breakout level at $228 resistance. Volume increasing on daily chart. Earnings catalyst in 3 weeks. Target: $6.00–$8.00. Risk: Below $225 support invalidates setup.
Here's what each piece means:
AAPL — The underlying stock is Apple.
April 18 — The option expires on April 18th. This gives you roughly a few weeks for the trade to develop. Shorter expirations are cheaper but decay faster — a concept known as time decay (theta). Longer expirations cost more but give you more time.
$230 Call — This is a call option with a $230 strike price. You're betting Apple's stock price moves above $230 before expiration. The higher the stock goes above $230, the more valuable your call becomes.
@ $3.50 — Each contract costs $3.50 per share. Since each options contract controls 100 shares, one contract costs $350. This is the maximum you can lose on this trade.
Target: $6–$8 — If the trade works as expected, you could sell the contract between $6.00 and $8.00 — a 71% to 128% gain.
Risk Level — The thesis tells you that if Apple drops below $225 support, the setup is no longer valid. That's your signal to cut the trade and limit your loss. Understanding chart levels like support and resistance is essential — our candlestick patterns guide covers the visual basics of reading price action.
How to Act on an Alert: Step by Step
Receiving an alert is step one. Here's the process for turning that alert into an informed trading decision.
Step 1: Read the Full Thesis First
Don't just glance at the ticker and slam the buy button. Read the entire trade thesis. Understand the reasoning. Does it make sense to you? Do you see the same setup on the chart? If the thesis references a technical pattern like a Golden Cross or a breakout above resistance, pull up the chart and confirm it yourself. The thesis is where you learn — it's not just there for decoration.
Step 2: Check the Current Price
Options prices move fast. If the alert was sent 15 minutes ago, the contract may have already moved from $3.50 to $4.25. You need to decide: is the trade still worth entering at the current price? A general rule of thumb — if the price has moved more than 15–20% beyond the alerted price, proceed with extra caution or wait for a pullback. A charting tool like TradingView makes it easy to see where the stock is trading in real time relative to the alert levels.
Step 3: Size Your Position Appropriately
This is where most beginners go wrong. Never risk more than you can afford to lose on a single trade. A common guideline is to risk no more than 1–5% of your total trading account on any single options trade. If your account is $5,000, that means $50 to $250 per trade — or roughly one contract on most alerts.
Step 4: Place Your Order
Open your brokerage app (Robinhood, TD Ameritrade/Schwab, Webull, Fidelity, etc.), find the options chain for the stock, locate the correct strike price and expiration, and place a limit order at or near the current ask price. Never use market orders on options — the bid-ask spread can cost you significantly. If you're new to placing options orders, Cboe's education center walks through the mechanics.
Step 5: Set Your Exit Plan Before You Enter
Know your target and your stop before you click buy. Write them down if you have to. The alert gives you the framework — your job is to stick to the plan.
Common Mistakes to Avoid
Even with great alerts, traders sabotage themselves with avoidable errors. Here are the biggest ones:
What Makes a Good Alert Service?
Not all alert services are created equal. The Financial Industry Regulatory Authority (FINRA) warns investors to do their due diligence before subscribing to any trading service. Here's what separates the good from the noise:
How Options Alerts Fit Into Your Trading Routine
Think of options alerts as a starting point, not the entire strategy. Here's how successful traders typically incorporate them into their week:
Sunday evening: Review the weekly watchlist. Services like Pure Power Picks publish a Stocks to Watch list every week. Get a feel for the tickers and themes heading into the new week. Check the economic calendar for earnings reports, Fed announcements, and other catalysts.
Market open (weekdays): Be ready for alerts. Most options alerts are sent during market hours, often within the first hour or two after the open. Have your brokerage app open and ready.
Midday check-in: Review any open positions from earlier alerts. Are they tracking toward the target? Has anything changed in the market that affects your thesis? If the alert referenced a swing trading strategy, you may be holding for several days — check key levels daily.
End of week: Journal your trades. Write down what you entered, why, what happened, and what you learned. This simple habit is the single biggest accelerator for improving as a trader.
Getting Started with Options Trading Alerts
If you're new to options or new to using an alert service, here's the most practical path forward:
Start with paper trading. Most brokerages offer simulated trading accounts. Follow the alerts as if you were trading real money, but without the risk. This lets you get comfortable with the process before putting real capital on the line.
Start small. When you do go live, trade one contract at a time. One. Not five, not ten. One. Build confidence and consistency before scaling up.
Try a free trial first. Most reputable alert services offer a trial period. Pure Power Picks offers free alerts so you can see the format and quality before committing. Use this to evaluate whether the style matches your trading approach.
Join the community. Trading is a lonely game if you try to do it alone. Being part of a community where you can discuss alerts, ask questions, and share ideas with other traders accelerates your learning curve dramatically. See what our members have to say about the impact of community on their trading.
Be patient. Not every alert will be a winner. Not every week will be profitable. The goal is to be net positive over time by managing risk properly and letting your winners run while cutting losers quickly.
Ready to See Options Alerts in Action?
Pure Power Picks delivers 3–5 hand-picked options trade alerts per week, complete with detailed trade theses, entry and exit levels, and a community of traders who have your back. Our team has been doing this for over 5 years — and our members keep coming back because the alerts are clear, actionable, and grounded in real analysis.
Start Your Free Trial Today →Frequently Asked Questions
What is an options trading alert?
An options trading alert is a real-time notification sent via email, SMS, or Discord that identifies a specific options trade opportunity. A quality alert includes the ticker symbol, call or put direction, strike price, expiration date, entry price range, profit target, and a detailed trade thesis explaining the reasoning. Alert services like Pure Power Picks typically send 3–5 alerts per week, with each contract usually priced between $0.50 and $5.00 ($50–$500 per contract).
How do you use options trading alerts effectively?
To use options trading alerts effectively, follow a 5-step process: read the full trade thesis first, check the current contract price (skip if it's moved 15–20% beyond the alert price), size your position to 1–5% of your account, place a limit order (never a market order on options), and set your exit target and stop-loss before entering. The most important step is reading the thesis — it tells you what conditions need to hold for the trade to work, and when to exit if they don't.
How much money do you need to start using options trading alerts?
You can start using options trading alerts with as little as $500 in a funded brokerage account approved for options trading. Most alert services recommend contracts in the $0.50–$5.00 range, meaning one contract costs $50–$500. A common risk management rule is to never risk more than 1–5% of your account on a single trade, so a $5,000 account would allocate $50–$250 per alert. Start with one contract at a time and scale up as you gain experience.
Are options trading alert services worth it?
Options trading alert services are worth it if they provide transparent track records, detailed trade theses, and education alongside the alerts — not just buy signals. Avoid any service claiming 100% win rates, as all trading involves losses. The real value of a quality alert service isn't just the trades themselves but the learning: understanding why a setup was chosen, how to read the chart, and when to exit. Look for services that publish their performance data publicly and offer a free trial so you can evaluate before committing.
What is the biggest mistake beginners make with options trading alerts?
The biggest mistake beginners make is chasing entries — buying a contract after the price has already moved significantly beyond the alerted level due to FOMO. If an alert recommended a contract at $3.50 and it's already at $4.50 by the time you see it, the risk-reward ratio has changed dramatically. Other common mistakes include going all-in on a single trade instead of diversifying across the week's alerts, ignoring the trade thesis, and holding losing positions through expiration hoping for a miracle instead of cutting losses early.
Disclaimer: Pure Power Picks is not a licensed financial advisor. All content, including trade alerts and analyses, is presented for educational and informational purposes only and should not be considered a recommendation to buy, sell, or hold any particular security or strategy. Options trading involves substantial risk of loss and is not suitable for all investors. Past performance does not guarantee future results. Please consult with a qualified financial advisor before making any investment decisions.