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Options Strategy

Video Tutorial

beeTrader – Options Strategy

Understand the Options Strategy function

Click on the image to expand

The Strategy window is divided into 4 macro areas which we will briefly describe in this chapter.

1.  Properties of Options Strategy

The upper part of the Options Strategy tab shows the properties of the strategy as a whole, so with all the parts that make it up (both legs and underlying).

  • Choose Properties: opens the Choose Properties window to choose which properties of the strategy to display;
  • Load Layout: load a previously saved properties configuration;
  • Save Layout: save the currently displayed properties configuration;
  • Highlights: enable / disable the highlight of each property;
  • Move Realized to Un-Accounted: removes the consolidated so far obtained from the strategy (Realized) and stores it in the Un-Accounted column. In doing so this value is not considered in any strategy calculation (Bep, Max Risk, Max Profit, etc.);
  • Clear Un-Accounted: cancels the previous operation, Move Realized to Un-Accounted.

2.  Legs

This section is the beating heart of the strategy in options. For each underlying, all the legs that have been traded and listed are listed.

As you can see from the examples above, the Quantity field is blue and indicates that the options are in basket, so it remains blue until the orders are finalized, in Paper Trading or in Real Market. When an order is executed, but is not finalized in Paper Trading or in Real Market, the latter results in basket (highlighted by the blue color of the cell with the quantity) and a message appears reminding the user to finalize the order.

Right-click menu below or future

  • Remove: removes the symbol selected from the strategy and trades, including any consolidated;
  • Edit: allows you to modify the selected symbol via the Edit underlying ;
  • Enable / Disable: enable or disable the symbol within the strategy and then in the strategy property and payoff calculations;
    • Paper Trading: performs the following operations in paper trading;
      • Buy / Sell: opens the Paper Trading Order window for order execution in paper trading;
      • Flat Position: closes the position in paper trading at the market price;
    • Real Market: performs the following operations in real market;
      • Open DOM: opens the DOM to execute the order in Real Market, for any changes to the order is available Order Manager or its reduced version present in the strategy;
  • Real-Market Combo: executes orders in combo / combination mode. This functionality is explained at this link and is only available for provider with Interactive Brokers through their platform’s API Trader Work Station (TWS).
  • Contract Details: opens the window with the details of the underlying asset and its futures and options;
  • Open Historical Chart: starts the Chart (historical chart) of the instrument;
  • Choose Properties: opens the Choose Properties window to choose which properties of the strategy to display;
  • Layout: allows you to load or save a configuration of properties related to the legs section.

Right-click menu on option

  • Remove: removes the symbol selected from the strategy and trades, including any consolidated;
  • Edit: allows you to modify the selected symbol via the Edit Options ;
  • Enable / Disable: enable or disable the symbol within the strategy and then in the strategy property and payoff calculations;
  • Paper Trading: performs the following operations in paper trading;
    • Buy / Sell: opens the Paper Trading Order window for order execution in paper trading;
    • Flat Position: closes the position in paper trading at the market price;
  • Real Market: performs the following operations in real market;
    • Open DOM: opens the DOM to execute the order in Real Market, for any changes to the order is available Order Manager or its reduced version present in the strategy;
  • Flag as Assigned / Exercise Options: depending on the sign of the option, so if bought or sold, it closes the option to 0 and the purchase / sale of the underlying;
  • Options Evaluator: opens the window Options Evaluator , to make evaluations of the Greek of the selected option;
  • Choose Properties: opens the Choose Properties window to choose which properties of the strategy to display;
  • Layout: allows you to load or save a configuration of properties related to the legs section.

Note: when an option expires the corresponding cell is colored in red, by clicking with the right mouse button it is possible to access the menu that includes the Settlement item, once clicked the window opens in which to set the settlement price of the underlying. In doing so, Iceberg automatically closes the option with the profit / loss relative to the settlement price set.

2.  Order Manager

As an alternative to the Legs card, the Order Manager can be viewed, which is a reduced version but with the same functions as the Order Manager  generic of beeTrader. From here it is possible to modify or cancel orders sent in real market. When a real market order is placed, Order Manager is brought to the fore.

2.  Trades

Inn this section is listed in chronological order and each one contains all the data calculated at the time the order was registered. In any case, each cell can be edited by double-clicking the mouse. Particular attention must be paid to Filled Type and Filled Quantity. In Filled Type the mode with which the order was registered is indicated, it can be paper trading or real market, by clicking on the cell with the left mouse button it is possible to modify this parameter. The Filled Quantity box remains blue until the order is executed either in paper trading or in real market.

We want to pay particular attention to the “Underlying Price (Last)” and “Reference Price” fields. These two values ​​that represent the value of the underlying at the time of the trade and the reference price of the underlying at the time of the trade may be different. This particular condition occurs when the trade is made on an option with maturity after the detachment of an underlying dividend, and a necessary condition is that the user has entered the dividend before the execution of the trade. It is very important for the calculation of the Greek that this operation is carried out correctly. For more information on dividends, please read the dividend page of the manual by clicking here .

Upon detachment of the dividend, always if inserted, beeTrader will generate a separate trade (bottom section of the window) and add the dividend to the realized of the strategy if it contains the underlying (as in the example 21/05/2018 the day of the detachment of the dividend of ENI were present in the strategy 500 shares).

Note: if the dividends are set on the day of detachment these will be included in the realized of the underlying.

2.  Alerts

This section is dedicated to Alerts that can be set on practically every parameter of each asset in the strategy.

For example, you can be alerted when the underlying comes up to strike, when the delta of an option is worth a certain value or when the atnow of the strategy reaches half of the maximum profit. For any alert selected it is possible to receive a notification email simply by ticking the corresponding box.

Right-click menu on alert

  • Add Quick Alert: adds a Quick Alert;
  • Edit Selected Quick Alert: edit the selected Quick Alert;
  • Remove Selected Quick Alert: deletes the selected Quick Alert;
  • Remove All Quick Alerts: delete all Quick Alerts;
  • Add from Template: adds pre-set alerts.
    • Net Result < -Max Profit
    • Net Result > (Max Profit / 2)
    • Strike Hits
    • Strategy BEPs
    • Options BEPs

2.  Notes

Section dedicated to strategy notes, here you can write what you want and everything will be saved in the strategy.

3.  Payoff

In the payoff section the strategy is displayed graphically. We will see below in the settings accessible with the right mouse button that it is possible to add to the standard payoff that shows the legs as a whole also the DPD Forecast Map obtained from the Defense Point Distribution (as in the example shown).

3.  Vertical

In this section there is the graph of the underlying and the cross payoff. This particular display mode facilitates the analysis of the strategy according to the performance of the underlying.

3.  Greeks

The Greeks chart (At Now) monitors in real time the Greek trend, while the Greeks chart (Realized) shows the subdivision of the consolidated profit / loss for each Greek.

In order for the values shown to be correct it is necessary that the dates, the prices of the executed and the value of the underlying at the time of the executed (present in the Trades section) correspond to the real ones.

3.  History

The History graph shows the trend, since the Strategy was created, of the profit / loss subdivided for each Greek.

In order for the values shown to be correct it is necessary that the dates, the prices of the executed and the value of the underlying at the time of the executed (present in the Trades section) correspond to the real ones.

More information on the options strategy charts is available in the relevant page of the manual, by clicking here .

In addition, a discussion on the payoff is available by clicking here .

4.  Options Chain

The Options Chain is designed to be functional and customizable, the user has the possibility to choose how many strikes to display, which and how many deadlines, which options to connect and which properties of the options to display. It is also possible to save your own configuration so as to have the properties that most interest you under control.

As you can see from the example above the Options Chain shows the strikes in the center, the Call column on the left and the Put column on the right.

  • Expiration Date : the list of strikes is divided by expiration and below each expiry the value of the Last of the underlying is displayed at that expiry, the value of the Last can change between different maturities in the presence of dividends. To view the correct last id value, it is recommended to read the Dividends & Moneyness;

  • Bid and Ask : prices (Bid and Ask) can be written in blue if the value displayed is Theoretical, while they are written in white if the displayed value is real then arrived from the real market through its broker’s platform. For the modification of the theoretical prices see the section Volatility Surfaces; 

  • Link LEDs : next to the Real Time column there is a LED that is green if the realtime connection for that option is activated, on the contrary it is red color if the connection for the option is deactivated. If the connection is off (red LED) the Start button is presented to activate it, if the connection is on (green LED) the Stop button is presented to switch it off;
  • Price update LED : next to the Bid and Ask columns there is a LED that turns green when a new price arrives from the platform and as time passes by last update the color gets darker and darker until it reaches red. This means that there has been no price on that option for a long time.

If the function Call / Put Parity from Strategy Settings is assigned a green color to the deadlines for which the calculation is made of the moneyness or a red color that the calculation is not made due to the failure to quote the strike atm.

Right-click menu on chain options

  • Filter Expiries: allows you to choose whether to display the first 2 deadlines, the first 4 deadlines, all the deadlines, or to choose which deadlines to display among those provided by the broker;

  • Filter Strikes: allows you to choose whether to display ATM + 4 strike, ATM + 8 strike, ATM + 16 strike, all strikes, or to choose the strikes to be displayed among the list of all strikes;

  • Default Filters: allows you to reset the number of deadlines and default strikes;
  • Update: allows you to request the Options Chain again from your broker;
  • Start RealTime: allows you to activate the realtime connection of all the calls, all the puts or the whole chain;
  • Stop RealTime: allows you to disable the realtime connection of all the calls, all the put or the whole chain;
  • Layout: lets you choose how to display the Chain, so if only Call, only Put or the complete chain. Layouts are also available for option properties: Delta, Extended Delta, Money Management and Extended Money Management. The user can create different layouts at will and recall them when necessary;
  • Choose Properties: allows you to choose which option properties to display. Each property is available for Call and for Put;
  • Resize Columns: resize the columns of all properties to optimize spaces;
  • Detach: creates an external window to beeTrader containing the Options Chain. The new window will be larger with the possibility of seeing more deadlines and more strikes.

For more information on the Chain options, an in-depth analysis is available by clicking here.

Strategy Evolution

The Strategy Evolution feature allows you to review all the changes made to the strategy during its entire life. At every change applied to the strategy, a new snapshot will be taken, including all the strategy’s and legs parameters and the PayOff chart data.
This feature can be disabled using the check box “Save Snapshot after Trades completion” in the “Strategy Settings” window.