Options traders live or die by the option chain, which is why we consistently strive to streamline and ultimately improve the options chain functionality in the OptionsHouse trading platform. Our most recent enhancements to the chain give our customers more control of their trading experience.
After logging in to your account, you can access the options chain configuration menu by clicking on the “custom” button in the upper right-hand area of the options chain.
1. Understand the equity markets. Options are derivatives, meaning they derive their prices from the prices of the stocks, ETFs and indexes they are listed on. While options strategies can limit risk or even change the risk you take, you should have some sort of opinion of the general direction of the particular security you are trading. Additionally, it’s probably good if you previously traded in the equity market. Market mechanics also play a role in how the options markets behave. Know where and how your stock trades, its volume patterns and any relevant fundamental data. Be aware of upcoming economic data being released, as macro data may also impact your trades. Also important to note is that options have multipliers; one options contract represents the right/obligation to buy or sell 100 shares of the underlying. Additionally, an option’s price also has a multiple of 100, so an option priced at $1.50 will in actuality cost $150 in your account.
2. Know your broker’s platform, commissions, and important phone numbers. Before you even click the buy or sell button, make sure you know exactly how your broker’s platform works. This includes understanding all the different order types (market, limit, stop, trailing, target, all or none, fill or kill, etc.) It is very easy as a beginner and even as an experienced trader to make a simple mistake unrelated to the direction of the stock or the strategy you choose and put yourself in a pickle.
Hitting “buy” as opposed to “sell” and vice-versa is a common error, and using a market order in a fast-moving market (resulting in a disadvantageous fill) is another. There are a multitude of other common pitfalls. Practice entering spreads and make sure you get them right. OptionsHouse will let you know the total commissions before you enter the trade, which is a nice feature, but be sure you check breakpoints on commissions if your broker offers any.
The option chain is one tool that is extremely important to all option traders as it lists the strike prices and expiration dates of all available calls or puts for any particular security. An option chain also includes the most current prices paid for the calls and puts, as well as the daily changes in these prices. You should be able to access the option chains for the stocks in your portfolio via your brokerage platform or on websites specializing in option trading information. Note that option chains are only available on stocks, ETFs, and indexes on which options are traded.
Finally, it might be a good idea to write down your trades in a notebook along with your account numbers and the important phone numbers for your brokerage firm(s). In the event that your computer fails or your power goes out, you will be prepared. These are all real possibilities. (more…)
When the professional option traders at PEAK6 Investments L.P.1 began to build the OptionsHouse platform, they had the goals of efficiency and ease-of-use in mind. One way the architects of the platform thought to streamline the trading experience was through the ability to execute a trade right from the Options Chain. In the same place where you can see changes in option prices, track implied volatility, and view the “Greeks,” you can place an options trade in a handful of steps.
Step One: Click on the “Options” tab (second from the left) at the Top of the Trading Tool to access the option chain. Make sure the appropriate ETF, index, or stock ticker has been entered in the Quote Lookup box.
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