Options Screeners at Schwab

Key Points

  • Learn about Schwab's suite of options screening tools.
  • Get a step-by-step guide on how to use all four tools: Pre-Defined Screeners, Customizable Screeners, Trade Assessor and Options Calculators.
  • Next time you're short on trading ideas, get some help from Schwab's options screening tools and eliminate some of the guesswork.

Ideas—you can never have too many trading or investing ideas. For example, even if you've spent years educating yourself about options strategies by reading books or attending classes, one of the most difficult challenges is simply finding the right option to trade. Many of the features in Schwab’s suite of options screening tools may help you solve this problem or at least narrow down your list a bit.

There are four main tools, and all of them can be found on schwab.com under the Trade > Options tab. There are a lot of similar subscription-based services available on the Internet, but as a Schwab client, you have access to these screeners anytime you want, absolutely free.

In this article I’d like to focus on the Pre-Defined Screeners and the Customizable Screeners, though I'll also touch on the Trade Assessor and Options Calculators.


Source: Schwab.com.

Pre-Defined Screeners

While the Customizable Screeners may be far more robust with functionality, the Pre-Defined Screeners (figure 1) are actually my favorite because I think they are relatively simple to use. There are 20 pre-defined choices, and the ones I've marked with red arrows below can screen two ways, giving you a total of 30 different screens. 

Figure 1

Figure 1 screen

Source: Schwab.com

Once you select the pre-defined screen that interests you, click the Get Results button and the option and/or underlying symbols will be displayed instantly, with real-time market and analytical data. Below the selected criteria, you'll even find a brief description of the criteria used by the screening engine.

From the output screen you can choose to see a detailed quote of the specific option or its underlying security by clicking on the option's symbol link. Go directly to the order entry screen by selecting the Open or Close button. You can also choose to display the entire options chain associated with the particular underlying security by clicking the Chain link.

In the Pre-Defined Screeners, the upper list of screening choices—which includes Volatility, Open Interest, Volumes, P/E and Put/Call Ratios—are based on the underlying security. The lower list of choices—which includes Implied Volatility, Volume and Open Interest—are based on the specific options contract. Our derivatives experts have assembled these pre-defined lists to include the data that might be most helpful to you.

With the Pre-Defined Screeners, you can identify underlying instruments whose options are trading with implied volatilities that are significantly higher or lower than the historical volatility, identified in the screener as "High/Low IV/HV Ratio."

Implied volatility is computed using an options pricing model (such as Black-Scholes-Merton, Barone-Adesi-Whaley, or Cox-Ross-Rubinstein) and solving for the volatility component. Implied volatility is the theoretical volatility of the underlying stock, ETF or index, based on the quoted price of its options. Options traders sometimes consider implied volatility to be helpful in gauging whether options are relatively cheap or relatively expensive. Rising implied volatility causes options premiums to rise or become more expensive; falling implied volatility results in lower options premiums.

The Pre-Defined Screeners also allow you to screen for specific options or securities whose options are experiencing a significant increase or decrease in implied volatility relative to the prior trading day, identified in the screener as "Large Increase/Decrease in Options IV" and "Large Increase/Decrease in Stock IV," respectively. Since implied volatility is one measure of uncertainty of the underlying instrument, a significant change in the implied volatility of options may be indicative of an anticipated change in the volatility expectation of the underlying stock, ETF or index.

Customizable Screeners

If you're a more advanced options trader or you simply want to specify exactly what you are looking for, use the Customizable Screeners (figure 2). Because options traders need to have an opinion about the underlying security before they select an options strategy, many of the same criteria you would use to find stock trading candidates are available in this tool. The five tabs located at the top, allow you to screen for a specific strategy.

Figure 2

Figure 2 Screener

Source: Schwab.com

Once you've selected your strategy and narrowed down the potential stock universe, you can add some specifics regarding exactly what type of option you're looking for by defining several criteria ranges (figure 3). One of my favorite features is the ability to specify whether or not the underlying security is part of a specific sector or industry and even whether it's a component of a well-known index. If you are a seller of volatility, you can use implied volatility as a complement to other filtering for both the option and the underlying stock, ETF or index. Additionally, if you're only interested in strategies that will generate a specific rate of return if the option expires (static rate of return) or if your stock gets called away (assigned rate of return), you'll have that capability, too.

Figure 3

Figure 3 screener

Source: Schwab.com

Once you have defined all of your criteria, you'll even be able to dictate how the output should look (figure 4). You can select exactly which fields to display, thereby eliminating any unnecessary data. Finally, you can save your criteria by name, so you can run the same screen any time you want. 

Figure 4

Figure 4 screener

Source: Schwab.com

The output of your screen should be exactly what you want and only what you want (figure 5). Again, from this output you can go directly to detailed quotes (by clicking on the options or stock symbol), options chains or order entry (by clicking on the option price in the Calls & Puts tab or on the Natural Bid, Natural Midpoint or Natural Ask quote for multi-leg strategies).

Figure 5

Figure 5 screener

Source: Schwab.com

Trade Assessor

The Trade Assessor (figure 6) is a single and multi-leg order entry screen that allows you to specify a number of items: your intended investment amount, your expectation for movement in the underlying security, and profit percentage.

Figure 6

Figure 6 screener

Source: Schwab.com

Output fields include Expired, Static and Assigned Rates of Return on covered and naked strategies, and Maximum Gain and Loss calculations. When you select more than one strategy at a time (using the Ctrl key) those strategies will be grouped by strategy, making it easier to move to the order entry screen.

My favorite features in the Trade Assessor are the ability to view graphical charts (plots) for profit and loss and options Greeks (figure 7).

Figure 7

Figure 7 screener

Source: Schwab.com

Options calculators

The final tool I'd like to discuss is the pricing calculator. It comes in two forms: basic and advanced. The Basic Options Calculator (figure 8), which is designed for investors who are new to options, will help you calculate options Greeks and theoretical values by reading the explanations and entering the relevant criteria.

Figure 8

Figure 8 screener

Source: Schwab.com

The Advanced Options Calculator (figure 9) is designed for more experienced options traders. Its functionality is similar to the basic version, but the interface skips the detailed explanations of the different components and allows you to change the criteria after the output and recalculate on the fly.

Figure 9

Figure 9 screener

Source: Schwab.com

Take advantage of these tools now

Next time you're short on trading ideas, get some help from Schwab's options screening tools and eliminate some of the guesswork.


Next Steps

Schwab clients: Contact a Trading Specialist at 800-435-9050 for questions or log in to the Trading Services Learning Center.
Not yet a client? Learn more about Schwab Trading Services.

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