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Duration: 5:40


Contributor: Interactive Brokers

Level: Advanced

This Traders’ Academy lesson will explain the layout and some of the features of TWS OptionTrader. OptionTrader displays market data for the underlying, allows you to create and manage options orders including combination orders, and provides the most complete view of available option chains, all in a single screen. This lesson will help users immerse themselves in a configurable options trading module where they can monitor relevant data and submit orders.

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Study Notes:

This Traders’ Academy lesson will explain the layout and some of the features of TWS OptionTrader.
This optimized window gives you streaming option chain data, option statistics, and quick spread and
order entry with robust order management capabilities.

To open the Option Trader, use the New Window dropdown, select More Advanced Tools, and the in the
alphabetical list select OptionTrader.

By default, the tool is populated with the current active contract since it is linked through the Group
windows feature. But you can quickly change the contract by selecting from the list of previously used
contracts, or entering an underlying and going through the contract selection wizard.

You can see how much the OptionTrader has to offer. It has a Statistics panel that users may configure
with various option related display columns including Open Interest, put/call volume, measures of
volatility and other key option readings.

The buttons panel, when armed, allows for instantaneous transmission of orders.

The Trading Panel, which shows your orders, daily log, trades for the day, your portfolio, and the Strategy
Builder, allowing users to easily create multi-leg complex orders.

The final panel displays Option Chains relating to the chosen ticker.

For any option positions held in a portfolio, users may quickly access only those quotes by clicking the
button “Load My Chains”. Click on the Portfolio tab to see all options and combinations held for the listed
ticker symbol. Right-click on an option position and select ‘Close’ to create an order to exit the position.

For open combination strategies, right-click on the position and by selecting ‘Close’ users will create an
order to exit all legs for the position.

Use the Clear Chains button to reset the Option Chains area. Click on the Time Period dropdown menu to
configure how far ahead you wish to see quotes for, or from the expiry-based window on the right, select
the appropriate month or multiple expirations. Click on Close when done.

Users can configure the number of strike prices to display by accessing the Strikes dropdown menu.
Individual strikes can be selected on the right. Or you can select a set number of strikes around the
current trading price of the underlying from the left. Note that you can also select a number of Standard
Deviations from current.

Calls are displayed on the left of the page while Puts are displayed on the right. Implied volatility for each
expiry is displayed to the right of the screen. To add implied volatility for each strike, right-click a column
header and select Configure Option Chains. From the Available Column display on the right, expand the
Option Chains grouping and click on Implied Volatility to Add it to Shown Columns on the left of the page.
Click OK when done.

Option Trader displays price quotes in two ways. Using the List View each chosen expiry is displayed by
scrolling down the page. Use the expand/contract arrow next to each month to see more or less data.
Alternatively, the Tabbed View shows just one expiration date at a time allowing users to click on each tab
to display only that month. Access additional expirations by clicking on the More dropdown menu. For
weekly and quarterly option expirations, check the box at the bottom of the contract listing.

To create an order, click on the ask or bid price field in the row associated with the strike price you want
to trade. Selected strikes will populate as new orders under the Trading section causing the Orders tab to
display in red font. Orders can be configured to change price, order type or time in force, for example, and
submitted directly from this line by clicking on the blue Transmit button.

Right-click for additional choices, including Discard, when you wish to remove the order from the Orders

To create a multi-leg complex order, click the Strategy Builder tab and click on the bid or ask prices for
each option required for the strategy you wish to build. Each leg will display in the Strategy Builder area of
the screen. If you click on bid when you meant to click on the ask price, simply change the Buy/Sell under
the Action column. Expirations and strikes can also be changed as can the type of action.

The Strategy Builder will name recognizable combinations and create a simple performance profile to the
right. Delete any leg by clicking the red “x” to the right of each line. Use the quantity, time in force and
price input fields to refine your order. Use the Transmit button to send your order to the exchange.

To display the implied volatility of any option quoted, use the Option Chains dropdown menu at the top of
the page and select Show Volatility.

Right-click on any column header in the Quote Panel, Statistics layout or the Option Chains page itself in
order to configure data you wish to display.

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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