Analyzing Options Strategies

E*TRADE Securities1

01/03/19

 

Analyzing Options Strategies

Leverage the Power E*TRADE tools to visualize your options trading strategy before or after you enter your trade.

1.       Log on to your E*TRADE account, hover over the “Trading” tab and select Power E*TRADE from the dropdown choices to launch the platform.

2.        From the “Trading” tab, select “Options,” and enter a stock ticker symbol or stock name.

  • On the options chain, the calls are displayed on the left side, the puts are on the right, and the strike prices are down the middle.
  • Directly above the options information are the available expirations.

3.       To trade an option, click the blue bid or ask prices.

  • Note that anywhere you see the blue bid or ask prices on the platform, you are just one click away from creating an order ticket.

4.       Click other options on the chain to create a spread.

5.       Modify the auto-populated order ticket accordingly: buy or sell, quantity, expiration, strike price, call or put, price, and other order instructions.

6.       To analyze a particular options strategy, click “Snapshot Analysis” to view the risk/reward profile of this particular trade, as well as other pertinent information such as earnings announcements and upcoming dividend dates.

  • Slide over the risk/reward graph to adjust for potential stock price changes to see how that could impact the theoretical profits or losses to the strategy.
  • Note that probabilities are subject to change based on factors such as market conditions and changes in volatility.

7.       To further analyze a particular strategy, click “Analyze in TradeLab”. You’ll see Snapshot Analysis above and Spectral Analysis below.

8.       Simulate various “what-if” scenarios for the options strategy using “Spectral Map” by sliding time forward or sliding potential stock price movement up and down.

  • The Spectral Slice will automatically update as you make changes to Spectral Map.
  • You can also adjust assumptions for implied volatility using the IV Forecast drop down menu.
  • You can review any changes to the Greek Risk Metrics, which you can view either as the Greek symbols or in plain English.

9.       If the trade fits your risk profile and you would like to enter an order, click “Trade” from TradeLab.

  • To analyze an existing position, click on the position from the Positions tab under “Account” and select “Analyze” from the pop-up window.

With the Power E*TRADE platform, you can thoroughly analyze and visualize your options trading strategy before or after you enter your trade, putting you in control of your options trading.