Even if you're a seasoned thinkorswim^®^ user, odds are, some of its tools are unfamiliar. Dig in for some features with a big bang for your buck.
Even if you’ve been using thinkorswim® for a while, odds are good parts of the platform are still unfamiliar. So let’s dig into some classic features, which pack a lot of bang for the buck.
How It Works and Why It Matters
Keeping track of profit and loss (P/L) is standard. And if you’re not in the know, the Position Statement lives under the Monitor tab.
First, with derivatives, these values will always be calculated in real-dollar terms to allow for apples-to-apples comparisons. In other words, if you see a P/L on an option position of $1.00, that is after any multiplying effect of quantity and specification and not a dollar gain on the contract price. So a $0.25 move in say, an S&P 500 options contract would be represented as +/- $25.00, after the multiplier is considered. Now, let’s break down each column on the page.
P/L Open. Measures the gain or loss of position value since an opening trade was made. When looking at a combined position (for example, all options in X symbol), P/L Open will not include any positions that have already been closed. In math-speak, P/L Open = (AVG COST x QTY) – (MARK x QTY).
P/L %. Same thing as P/L Open, but expressed as a percentage. P/L Open = ((AVG COST x QTY) – (MARK x QTY)) / (AVG COST x QTY).
P/L Day. Measures a position’s current value against the previous day’s close. Note that when looking at a combined position (for example, all options in X symbol), the P/L Day will include gains and losses from any position that’s been closed on a given trading day. P/L Open = (AVG COST x QTY) – (CLOSE x QTY).
P/L YTD. Measures a position’s current value against the close of the previous year. Note that when looking at a combined position (for example, all options in X symbol), the P/L YTD will include gains and losses from any position that’s been closed since the year began. P/L Open = (AVG COST x QTY)
– (CLOSE x QTY).
Mark Value. This is the value of the position at its current mark price (the amount of money it would give/take to close the position). With a short position, this would be a debit, since the cash from selling the position has already been included. In the case of a long position it’s a credit, since it would bring in funds when liquidated.
BP Effect. This is the impact on your margin, or buying power, available in your account.
Last, the greeks columns (delta, gamma, theta, vega) simply include each total position greek. For example, if you own 10 call options, and the greek column states 495 deltas, each call has 49.5 deltas.
Get Organized For Peace Of Mind
Captain Obvious says, “trading can be complicated.” Organizing combinations of positions with differing strategies, possibly in separate accounts, can be a challenge. To simplify, thinkorswim takes the Position Statement a step farther with a flexible system of “subgroups” you can use to arrange custom trades based on defined criteria. So at a glance you can see how any set of positions are performing. (Refer again to Figure 1.)
FIGURE 1: POSITION ZEN. All of the vitals for the trades you have on right now live on the Position Statement of thinkorswim. And if you can’t tell up from down because you’re holding too many positions, organizing your multiple positions into “subgroups” can help organize your worried mind. For illustrative purposes only.
With subgroups, you can assign either a whole position or individual trades in a position, to a defined subgroup. For example, you can separate some or all of the spread trades of a given type from other option positions. Or you could separate your “speculative” trades from your “high probability” trades to contrast your strategies’ effectiveness. According to your preference, you decide how to divide these positions. Within a subgroup, the software will track the metrics of a given position (e.g. P/L, delta, net-liquidation value, etc.), even if that trade is only a portion of the overall position in a given security. Positions can also be entered or exited directly within a subgroup so you can track their progress over time.
As for how this all works? To start, click on the action menu at the top of your Position Statement and check “Show Subgroups.” Then, right-click the position you’d like to move and in the menu choose “Move to Group > Add Group...” Since this is the first one you’ve created, you’ll have to give it a name. But other than that, there’s nothing to it. Other orders or positions can be added to that group from the same menu. To add an individual position trade, go to the Trade History section of the Account Statement and right-click on the one you’d like moved.
To assign subgroups to new positions, you have a couple of options. If you select a subgroup in the account selector at the top of the platform, any orders sent will go to this subgroup automatically. As well, a subgroup can be selected directly on the Order Confirmation dialog box. Closing orders can be assigned to the same subgroup as the opening transaction by checking “Assign subgroups to closing orders” in the Orders section of the Application Settings.
Watch Out For That Tree, Um, I Mean Trend
And for something new, we’ve added a different kind of alert on thinkorswim Charts—the ability to add alerts based on a chart drawing (e.g. trendline, retracement, channels, etc.). Now you can be notified whenever a security’s price has broken through a trend that you’ve defined, without being clairvoyant and picking a price. Cool.
The mechanics of setting up such an alert are straightforward. Simply right-click on a created drawing and select “Create alert with drawing…” This opens up the alert-creation menu where you can define how you’d like the alert to trigger. Since all drawings are in effect simple lines, an alert can trigger when the price crosses above or crosses below the defined line, or whichever comes first.
Beyond that, all the standard alert preferences can be set from this menu, such as submission time, notification method, or whether to track a reverse crossover. When these parameters are set to your satisfaction, click “Create” to set the alert. Creating a drawing alert will place a flag on the drawing to indicate that an alert has been set which can be double-clicked to either edit or cancel the alert.
Drawing alerts on all symbols may also be viewed in the “Alert Book” section of the “Marketwatch” tab, alongside any other alert types you may have set. This section shows you the name of the drawing and symbol for which the alert has been set, as well as the timeframe of the chart for which the alert applies. This last bit is very important to keep in mind to avoid confusion: since lines of various types change slope when applied to different chart aggregations, remember that an alert will trigger only when a crossover occurs on the same aggregation on which the alert was set.
For example, it’s possible to see a crossover on a 15-minute chart that does not appear on a 5-minute chart. So if the alert was created on a 5-minute chart then the alert would not trigger. To remind you of this, the chart will only show a flag on charts of the same aggregation, and the entry in the order book will specify to which aggregation the alert is applied.
FIGURE 2: TREND ALERT! Price alerts are as old as the sun. But this new baby can alert you when your stock smacks through the bottom of a trend-line or breaks out above it. For illustrative purposes only.
for thinkMoney ®
Financial Communications Society 2016
for Ticker Tape
Content Marketing Awards 2016
The information presented in this publication does not consider your personal investment objectives or financial situation; therefore, this publication does not make personalized recommendations. This information should not be construed as an offer to sell or a solicitation to buy any security. The investment strategies or the securities may not be suitable for you. Any and all opinions expressed in this publication are subject to change without notice.
Options transactions involve complex tax considerations that should be carefully reviewed prior to entering into any transaction. The risk of loss in trading securities, options, futures and forex can be substantial. Trading foreign exchange on margin carries a high level of risk, as well as its own unique risk factors. Before considering trading this product, please read the Forex Risk Disclosure. A forex dealer can be compensated via commission and/or spread on forex trades. TD Ameritrade is subsequently compensated by the forex dealer. Futures and forex accounts are not protected by the Securities Investor Protection Corporation (SIPC). Product and company names mentioned herein may be trademarks and/or registered trademarks of their respective companies.
Transaction costs (commissions and other fees) are important factors and should be considered when evaluating any options trade. For simplicity, the examples in these articles do not include transaction costs. At TD Ameritrade, the standard commission for online equity orders is $9.99, online option orders are $9.99 + $0.75 per contract. Orders placed by other means will have higher transaction costs. Options exercises and assignments will incur a $19.99 commission.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2019 TD Ameritrade.