Introducing an easy to use all in one Options Strategy Analysis tool - TheOptions Lab

Quote from pengw:

I just checked with our data provider, the current package only covers Canadian stocks, not options. Th price we paid will be much different if we also want to include options data. Can you tell me what broker or data sources you are getting Canadian stock options data from ?

So to use The Options Lab for now, you will have to enter the options data by hand by choosing the Offline tab, you only need enter those data ( total four fields ) once. Top sections of the screen provides you the days to exp for diferent months so you don't have to calculate yourself.

Regards,
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thanks for looking into this, truly appreciate it.

I'm using TD Waterhouse Canada for my data. TD Ameritrade purchased thinkorswim, so we should have those tools within the next year I imagine for canadian stock options.

too bad there's a price tag attached to it, but why would they make it easy right?

very helpful tool, let me know if Canadian data ever gets incorporated.
 
Repost: I hope this post will help you understand why options greeks are useful, if you don't know so already :-}


Today, I will show you how to use The Options Lab with a quick step-by-step demo with Google options.

1. Go to http://www.TheOptionsLab.com make sure you login already.

2. Select Online tab, then enter ticker 'goog' ( in all lowercase letter many upper case are choosen as Hot Key), then hit enter or click on the Update button

3. Click on the 'Short Straddle' from the 50 avaliable options strategy on left hand side

4. On the upper right section, change lots from 1 to 10 on both legs, click on refresh.

5. By default, The Options Lab choose the nearest exp date 8/21/2009 , which is 20 days from today ( you can find Days on the top of the screen )

6. Since it is a short srangle, the strike by default will be 430/450.
The default IVs for both legs will be calculated based on the current Google implied IV, put and call's IVs will be calculated separately.

7. Now the serious part starts, use scroll bar to mak sure the you can see the whole chart section.

8. Go to the 2nd screen on the right hand side of the screen, Change the Days numericStepper by one day from 20 to 19,
you will see the paper gain from the one day change without changing IV and stock price will be $506.8 which will match the Total Theta value.

9. Continue decreasing the Days, you will see paper gain grow faster with a bigger Theta totals.

10. Now assuming the Days is set to 19 which means One day is passed, please change IV numericStepper from 26% to 27%,
you will see the $506.8 immediately become $242.64 loss.
which is basically the difference between initial total Vega (-$769.6) and total Theta ($512.7), Now the greeks is no longer useless, right ? This is because Short Strangle is short theta and short Vega postion, you are hope that Volatility drops and days go by faster.

I will show you more in next post.
 
This time I will show you how to check the total delta of a options position in the Options Lab http://www.TheOptionsLab.com

1. Click on Online tab, enter 'rimm'

2. On the upper right section, change both long call and log put into short call and short put, then uncheck Included column for the short call, so the current position become a short 1 put only.

3. The initial delta show 37 while the Totals Delta also show 37.

4. Remember the chart shape.

5. Now check the short call and uncheck the short put, also check the stock, now the position become a short call and long stock

6. Now the initial delta for short call is -63 and delta for long stock is 100 so total delta is 37 again.

Why because a short put is as same as a short call and long stock position.

Do all three together, you will have an arbitrage trade.

Will show more trades next time.
 
Many Options Lab member asked me what options price are used to calculate to the IV, how many days are used and what is the interest rate.

Here are the short answer:

The Options Lab uses the average price of bid and ask as options price. It also uses 360 days. Currently it treats interest rate as 1%.
 
Quote from Patso:

What are you talking about DAGNYT!!! Why are you turning this around and making me look like the bad guy here!!!

Maybe I express myself the wrong way, or you missed the point I'm trying to make here, but why are you so negative about my post...!!
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He did the same thing to me a couple of days ago. I gave some detailed thoughts on a response he made, and he jumped all over it.
 
Butterfly, iron butterfly, condor, iron condor, what are the differences ?

The simple answer is that they are all quite simliar. And all of them are short vega and long theta.

Some has three legs and some has four legs but the key differences that matter are each one has a different sensitive to volatility and time. So even they are all short vega and log theta.

The total dollar values of vega and theta are diferent. So when you choose among them, choose one according to how you predict volatility changes.

Thanks,
 
Many people asked why Options Lab only take four legs ?

To answer the questions, let's start from basic.

In theory, number of Options Strategies are unlimited or as people say, are only limited by your imagination.

In practice, there are about 56 to 64 common used strategies where the Options Lab cover 50 of them.

With four legs, the possible strategies are 256.

Many brokers allow you to create an strategy with more than four legs, but unless your give a very wide spread, those orders will never be executed.

So most people legs into a position. Now imagine you have more than four legs to trade, you have to trade off betwen price and speed.

When you traded four or more legs, you'd better plan to hold your positions to expiration. That is why some strategies such as butterfly or condor has so many legs. They are relatively low risk and allo you to sleep at night.

We at the Options Lab think four legs will be enough for most practical use, The Options lab also allow you to include the underlying in your strategy analysis.
 
Guys,

Just because I mentioned some tool by name, it does not mean I don't want to start a serious discussion.

I want to make sure the trades/strategies I mentioned are backed up by real data and real analysis. personally, I have been trading options since 1995. I saw that too many options strategies are only good on paper or at most are only good for some options market makers who only pay 1 cent per leg commisssion and do not worry about bid/ask spread.

For all the trades/strategies I described, I want to back them up with real underlying and real data ( price, P/L and greeks ). For that I am using the Options Lab, if you see a better tool, please mention it here. I will be more than happy to try it.

All traders are looking for some edges, even tiny one.
 
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