Cool Tools You Should Know

Useful tools you can use are the OnDemand feature in thinkorswim from TD Ameritrade and the yield curve. OnDemand gives allows you to watch a replay of price action so you can better analyze price action. Keeping an eye on the yield curve to see if it is flattening or steepening.

https://tickertapecdn.tdameritrade.com/assets/images/pages/md/
3 min read

Key Takeaways

  • Make more educated trading decisions using the OnDemand feature on thinkorswim®
  • Understand how time decay or volatility impact options prices during major events
  • Chart the yield curve to see if it is inverting, flattening, or steepening

OnDemand Feature

So you have a couple symbols on your watchlist that you like to trade. Maybe you’re bullish on one but not sure why price isn’t moving. One tool that can help you analyze price behavior more closely is OnDemand for thinkorswim. You see how price behaved when it reached a certain point such as a support or resistance level by going back in time.

Say you pull up a price chart of a stock you want to trade and see that price came close to a support level and has started moving up (Figure 1). But price is stalling, and you’re not sure if the uptrend will continue. You look back on the chart and see price hit that support level on July 31, 2018. 


FIGURE 1: THINKORSWIM ONDEMAND. Source: thinkorswim from TD Ameritrade. For illustrative purposes only.

What was the price action in the options at that time? Here’s how you can watch a replay of that price action using the OnDemand feature on thinkorswim (Figure 2).


FIGURE 2: ACCESSING ONDEMAND. Source: thinkorswim from TD Ameritrade. For illustrative purposes only.

1 – Click the OnDemand button on the top right of your screen.
2 – Select July 31, 2018 on the calendar, then click the Go! button.
3 – Now go to the Trade page and view the options chain. 
4 – Click the step forward button to see how options prices change as you move closer to expiration.

Once you’re done using OnDemand, click on the OnDemand button and it takes you back to prevailing prices. OnDemand is effective for understanding how time decay or volatility impact options prices, especially during major events such as earnings releases, as options get close to expiration, or price action at technical levels. This can take you one step closer to making more educated trading decisions.

Visualize the Yield Curve

Do you know if the yield curve is inverting, flattening, or steepening? It’s generally thought that an inverting (or negatively sloped) yield curve, when short-term bond yields are higher than longer-term ones, portends a recession or bear market. Traders watch the Fed’s interest rate decisions carefully, since they can impact the market’s price movement. You can look at the relationships between any short and long-term bonds such as the 2-year Treasury notes (/ZT) and 30-year Treasury bonds (/ZB) or the more popular 10-year notes (/ZN) versus /ZB known as the notes-over-bond (NoB) spread. And you can keep an eye on the yield curve on your thinkorswim platform by looking at a chart of the NoB spread.

From the Charts tab, type 2*/ZN-/ZB in the symbol box. The chart in Figure 3 is a line chart of the NoB spread. The 2 in front of the symbol is the weighting on the contracts, which depends on the ratio of the spread. This information can be found on the CME Group website. The yield curve steepens if economic conditions are looking strong. If the reverse happens, the yield curve starts flattening.

FIGURE 3: VISUALIZING THE YIELD CURVE. You can chart the difference between the longer- and shorter-term yields and see if the yield curve is flattening or steepening. Source: thinkorswim from TD Ameritrade. For illustrative purposes only.
Print

Key Takeaways

  • Make more educated trading decisions using the OnDemand feature on thinkorswim®
  • Understand how time decay or volatility impact options prices during major events
  • Chart the yield curve to see if it is inverting, flattening, or steepening
Call Us
800-454-9272



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.

Scroll to Top