When you look beneath the Analyze tab on thinkorswim®, you may find some features you may not have known about.
How often do you analyze the risk/reward trade-off for a potential options trade, then second-guess your decision and end up not placing the trade? It happens. Trading gives rise to anxiety and, as a result, when it’s crunch time, you may look for anything to procrastinate placing the trade—munch on snacks, watch cat videos, play with your phone, and so on.
Fortunately, there are some tools you could apply that might help reduce the pre-trading anxiety. Let’s focus on the Analyze tab on thinkorswim®. There are many features that can be found on this tab, but traders often stick to the default settings. Here are three others to consider.
Custom layouts for the Option Chain. There’s virtually no limit to how you can customize the Option Chain on thinkorswim (see figure 1).
FIGURE 1: CREATING A CUSTOM LAYOUT IN THE OPTION CHAIN. There’s a lot of flexibility when it comes to displaying relevant information in the Option Chain. Chart source: The thinkorswim platform. For illustrative purposes only. Past performance does not guarantee future results.
Options Statistics. Want to break down volatility (vol) and know more about the options order flow? That’s where Today’s Options Statistics could help. Note it’s divided into three sections (see figure 2). On the left is the vol breakdown; the middle section looks into the order flow; and the section on the right breaks down the Sizzle Index.
Product depth. Speaking of unusual options activity, let’s move on to vol skew. Skew indicates if the markets are behaving normally. Typically puts are more expensive than calls, but sometimes the skew can be reversed or flat. Product Depth, found below Today’s Options Statistics, is a graphical representation of the skew (see figure 3).
Knowing the skew could help strategy and strike price selections.
It’s a good idea to explore the many features available on the thinkorswim platform. Knowing your tool choices could help you make more confident decisions when placing trades.
Find your best fit.
Do Not Sell or Share My Personal Information
Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
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.
TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other’s policies or services.
Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold.
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.
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, a subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2024 Charles Schwab & Co. Inc. All rights reserved.