The E*TRADE Options Income Backtester Tool

E*TRADE Securities1



How to Use the E*TRADE Options Income Backtester Tool

Use the E*TRADE Options Income Backtester tool to compare historical returns for income-focused options strategies versus owning the stock alone. While it can be useful to see how these trades performed in the past, it’s important to note that backtested results are not an indicator of future performance.

1. Log on to your E*TRADE account, hover over the “Research” tab, and select “Options” from the dropdown choices.

2. Click “Options Income Backtester” on the “Options Tools” tab to launch the tool.

3. To begin, enter a company name or stock ticker in the symbol box on the “Standard” tab.

  • Note: You can also use the “Custom” tab to modify additional settings, including: specific search dates, deltas, minimum bid, days to expiration, and days before expiration to roll the position.

4. Select which income strategy you would like to back-test (covered call or cash-secured put)

  • The Covered Call report will display different historical results for a covered call strategy of collecting premiums for selling calls against stock you own using various deltas and expirations.
  • The Cash-Secured Put report will display different results for a cash-secured put strategy of collecting premiums for selling puts on a stock you’d like to potentially own using various deltas and expirations.

5. The report displays with the highest Total Strategy Return at the top; however, you can click the column header to reverse the order.

6. Click “View on Chart” to see the corresponding chart—which is displayed under your results. It contains the strategy characteristics along with a comparison between the returns of the strategy versus the stock only.

7. Click the blue arrow on any of the rows to see currently available potential opportunities in the market with the deltas and expiration closest to those of the selected strategy.

8. To trade one of the strategies, click “Trade” to populate an options order ticket with the specified strategy.

9. On the options order page, you’ll need to select a “price type” from the dropdown list before you can preview the order. You can also set the duration of the trade from the “Duration” dropdown list.

10. When you’re ready, click “preview,” and if everything is accurate, click “place order” to send your order to the market.

By using the E*TRADE Options Income Backtester tool, you can study how different options income strategies have performed in the past as part of your research when looking for opportunities in the markets.