ThinkOrSwim.
Best Option Analyzer/Software
- Thread starter WmWaster
- Start date
ThinkOrSwim.
I believe the writer is referring to thinkorswim when writing 'TOS'.
To answer your prev post, I have been very happy with thinkorswim's application performance. I have an iMac at home and a Windows laptop on the road, and in both environments the TOS platform is very good.
There were times when I had to close and reopen the application, when I viewed charts that TOS piped to its users from prophet.net... the problems only occurred when I was veiwing prophet.net charts. (incidentally, similar problems occurred to me when I viewed prophet.net charts via optionsXpress, as well...)
Anyway, thinkorswim has now implemented their own inhouse-developed charting environment. Since I began using TOS's charts, I've had no problems.
I'd be glad to talk more about my experience, just send me a private message.
As I said earlier, you might want to get the free trial of the platform and see if you like it. As far as software is concerned, you should find all the tools you need for selecting and analyzing option trades/positions, within the TOS platform.
As far as options and options strategies, I agree that options are simple...but in my opinion, definitely not easy. The thing to remember is that option prices, whether in your favor or not, are resultant of different variable factors and not just the price of the underlying.
For example, buying a call can be profitable as the price of the underlying increases. However, there have been times when I've bought calls, and even after the underlying had moved up by a significant amount, the call option had actually *lost* value. Go figuree... and, consequently, trading the underlying would've been more profitable.
But, after realizing the factors that played into this pricing dynamic, I realized how I could leverage options in ways other than just in terms of total dollars at risk vs. reward.
Think about it... if I was right about the underlying's movement but lost money on the (correct) options, could I be *wrong* about the underlying's movement and still *make* money on options?
Thanks to some of thinkorswim's training (through www.optionplanet.com), some traning from Optionetics, and reading a lot books and newsletters, I learned that I could leverage options so that I could make money when the underlying went my way, when the underlying didn't move anywhere, and even when the underlying moved slightly the wrong way.
Well, I'm getting long winded here... so I'll stop, but do keep in touch... I'd be happy to share my ideas/experiences with you. I hope you find trading these things as fun and interesting as I do.
Happy Trading,
Paul.
Why? How could it happen?
Could you mind explaining more about that?
The underlying goes in my direction, but I'm losing
I suppose this could only happen if the extent of movement is too small or the option is thinly-traded or you get options whose strike price is too far away.
Volatility shouldn't matter too much, although it will affect how much you gain, but it shouldn't be against you if you are right in direction.
That's my understanding. But I could be wrong since I have no expertise in options, so don't quote me on that.
From the sound of it, it seems it is difficult to gain in options. Too many to consider. Why not simply trade future as you may not win even if you estimate the trend correctly?
Thank you!
Quote from WmWaster:
Why? How could it happen?
Could you mind explaining more about that?
The underlying goes in my direction, but I'm losing
I suppose this could only happen if the extent of movement is too small or the option is thinly-traded or you get options whose strike price is too far away.
Volatility shouldn't matter too much, although it will affect how much you gain, but it shouldn't be against you if you are right in direction.
That's my understanding. But I could be wrong since I have no expertise in options, so don't quote me on that.
From the sound of it, it seems it is difficult to gain in options. Too many to consider. Why not simply trade future as you may not win even if you estimate the trend correctly?
Thank you!
Trading is difficult, no matter which instrument you trade.
Let's suppose you buy a call option as you expect the underlying to move up. If the implied volatility of that option is very high then you have bought an expensive option. Now, suppose the underlying moves up, but at the same time the implied volatility drops by half. So although the underlying moves in your expected direction the loss from the drop in volatility more than offsets the gain from the underlying move.
This is a common occurence in equity options, for example, when the implied volatility runs up prior to earnings announcements, FDA hearings and similar events in expectation of a significant price move. Then, once the news are out the implied volatility gets crushed. So, options can easily drop in value or stay flat even though the direction of the price move was favourable.
Looking from another perspective. Suppose the implied volatility runs up as described above, so you, expecting a subsequent crush, sell a straddle when the implied volatility is at its peak. Surely, once the news are out the implied volatility gets crushed down and you expect to see a handsome profit, yet when you look at your position you find that you have loss because, even though the volatility fell as you predicted, the price move was much larger than expected. In other words, the realized volatility was greater than the implied (i.e. the market has underestimated the size of the move and thus underpriced the straddle).
So, volatility is not money.
Seriously, pick up a book on options and get a basic understanding of how options are priced and what affects their value.
It looks option is more complicated.
I would like to know if there's any way to predict volatility.
The reasons why I would like to trade options are because of the following:
- If I see the trend is going to rise and I buy a call at a cost.
Even if the price doesn't rise enough to cover the premium, it doesn't mean I lose money as I can sell the call and gain.
- As the underlying price rises, the option premium will rise faster due to the increase in intrinsic value. But it drops, the option premium will fall slower due to the decrease in intrinsic value
Now I have mixed feelings. It seems I not only need to predict the direction & strength of the underlying, but also volatility and something more. In fact, if option trading is not more beneifical than future, I'd rather go for future. If I predict correctly, I will gain with no exception. That's simple!
Hence the comprehensive list of resources I provided you with.
Have you gone through any of the resources I mentioned or were you expecting someone to tell you the answer in a forum post? I see that MTE has already expended some effort on this matter with you on this and another thread.
Cake + Eat it = Not possible.
You want leverage when you are right on direction but not when you are wrong.
Without being rude, I would have to concur with MTE's assertion that you still have a bit to learn on this topic - not that I'm an expert myself.
Unfortunately, you aren't going to be successful at learning options by asking a few questions on forums without first having some basic grounding in the subject matter. You can attain that basic level of knowledge by going through the previously mentioned resources.
I'd rather go for future. If I predict correctly, I will gain with no exception. That's simple!
LOL. Suggest you go with your gut feelings then and avoid options.
Good luck!
MoMoney.
MoMoney,
Frankly, I haven't really spent some efforts on learning options.
I would like to know if any option trader can gain consistently first.
Could you manage to predict well and gain from option trading?
Is there any real reliable/practical way to predict volatility?
-----
As I'm already a future trader, I would only like to learn it if it's more beneficial than future.
Sure if I see options are better instrument than future, I will learn by myself. I won't expect I can learn simply in the forum.
So what do you guys think about "future vs option"?
Why do you guys trade options?
If it's future, you only need to predict its trend, no more.
Still you guys decide to trade options.
What lead you trade options instead of future?
Frankly, I haven't really spent some efforts on learning options.
I would like to know if any option trader can gain consistently first.
Could you manage to predict well and gain from option trading?
Is there any real reliable/practical way to predict volatility?
-----
As I'm already a future trader, I would only like to learn it if it's more beneficial than future.
Sure if I see options are better instrument than future, I will learn by myself. I won't expect I can learn simply in the forum.
So what do you guys think about "future vs option"?
Why do you guys trade options?
If it's future, you only need to predict its trend, no more.
Still you guys decide to trade options.
What lead you trade options instead of future?
Hmm... Yes, it sounds very right.
But it may not if you think twice.
There're all sorts of knowledge, but does all knowledge good? Does all knowledge suitable to you?
You have limited time only. Do you think you should learn everything coming across you?
===========================
Should I learn to scalp?
Should I learn to arbitrage?
Should I learn to how to select a good fund?
Should I learn to trade penny stocks?
Should I learn to trade intraday, swing, position, and long-term trading?
Should I learn to discover undervalued stocks?
Should I learn to trade on momentum?
Should I learn to trade on news or rumours?
Should I learn to trade on fundamental analysis?
Should I learn to trade by order books?
Should I learn to trade by tick charts only?
Should I learn Dow Jones Theory?
Should I learn Elliot Waves?
Should I learn indicator trading?
Should I learn Random Walk Theory?
Should I learn Contrarian theory?
Should I learn every single indicator in this planet?
===========================
There're just so many things for me to learn, but I'm not going to learn all of them.
Some are worth learning, time and reward wise. Some aren't. They are either of little use or no use at all. If you learn too much, you might get confused as some are contrardictory with each other.
You need to filter what you (want to) learn.
My 2 cents.
