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Duration: 4:03

Instructor:

Contributor: Interactive Brokers

Level: Advanced

A spread order is a combination of individual orders (or legs) that work together to create a single trading strategy. In this lesson we will review how to enter these combination and spread orders in TWS using the Combo Selection tool.

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Study Notes:

A spread order is a combination of individual orders (or legs) that work together to create a single
trading strategy. In this tutorial we will review how to enter these combination and spread orders in
TWS using the Combo Selection tool.

Please note that multiple leg strategies, including spreads, will incur multiple commission charges, which
will impact trade P&L.

You can access the Combo Selection tool as you enter the underlying ticker in to a quote monitor or
watchlist row – instead of choosing Stock or Options, select “Combinations – and then Option Combos,
SMART”.

The Combo Selection window has three tabs:
On the Multiple tab: the user can do a lot of filtering. For our purposes, look at the Strategy dropdown
menu. Here you can see a list of available option related strategies to help define the order. For this
example, I will select a vertical call spread, and create an order to BUY the spread combination. From
the Last trading Day column, select the month you wish to trade. Select call or put from the Right
dropdown menu for the buy strike. The sell strike for a vertical spread will automatically populate with
the same option right. Use the Strike dropdown menu to select the lower strike to Buy and repeat the
selection process for the upper strike price to be sold.

You may at this stage change your Buy and Sell amounts if desired from the Ratio adjustment column.
You can clear your selection with the Reset button or add the combo to your quote monitor or watchlist
with the “Add” button. Check the box next to request market data for legs if you wish to see quotes for
each leg of the combination should you want to see them on the monitor. Click “OK” to close the Combo
Selection window.

The key to the Strategy tab is to define a Strategy and an action (Buy Combo or Sell Combo). The tool
will allow you to define details ONLY for legs that are consistent with your selected strategy. Add the
combo to your quote monitor or watchlist with the “Add” button. Click “OK” to close the Combo
Selection window.

The Pair or Leg-By-Leg tab is the most flexible section of the Combo Selection tool. You can drag a
selection of stock or option tickers from a quote monitor or watchlist into this tab – or you can type the
ticker of the underlying for the leg you want to add.

e.g. Add F, GM and create a 3*1 ratio spread from a Monitor page.

Or you could drag separate option tickers from within Option Trader.

e.g. TSLA call spread 250/260 by dragging legs

Add the combo to your quote monitor or watchlist with the “Add” button. Click “OK” to close the
Combo Selection window.

In Mosaic – Once you have added a combination quote line to your watchlist, clicking on the combo
ticker row adds the combo to the Order Entry panel. Define the order details in the Order Entry panel.

Check the Order Confirmation window and when you are ready, submit the order.

When the combination order has been executed, you can check your combo position in your Portfolio
window of Mosaic.

In your Portfolio window in Mosaic, for any stock combo you will see one ticker row for the entire
combination, with a “+” next to it. Expanding this allows you to view leg details. You can right click on
this combination ticker row and select “Close” to create an order to close the entire combination.

Disclosure: Interactive Brokers

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Supporting documentation for any claims and statistical information will be provided upon request.

Any stock, options or futures symbols displayed are for illustrative purposes only and are not intended to portray recommendations.

Disclosure: Order Types / TWS

The order types available through Interactive Brokers LLC’s Trader Workstation are designed to help you limit your loss and/or lock in a profit. Market conditions and other factors may affect execution. In general, orders guarantee a fill or guarantee a price, but not both. In extreme market conditions, an order may either be executed at a different price than anticipated or may not be filled in the marketplace.

Disclosure: Options Trading

Options involve risk and are not suitable for all investors. For more information read the “Characteristics and Risks of Standardized Options” also known as the options disclosure document (ODD). To receive a copy of the ODD call 312-542-6901 or click here. Multiple leg strategies, including spreads, will incur multiple commission charges.

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