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Tools in StreetSmart Edge--And How You Can Use Them

Tools in StreetSmart Edge--And How You Can Use Them

As an active trader myself, I believe that this is an amazing platform for active traders. There are so many features to discuss so I have divided this topic into several parts.

Order and position tiles     

If you have an existing order or position in a particular stock, option or ETF, you’ll be reminded every time you check a quote. A small "O" for order or "P" for position will appear at the top of the Trade Tool or Symbol Hub as well as beside the symbol in the options chain. 

Trading Tool

If you click on the "O" or "P," you can quickly change or cancel an order, or close out a position.

Trading Tool

Strategy chooser  

Select an option strategy using the drop-down box (called the "strategy chooser" in the user manual) that's located in the upper left-hand corner of the Trade Tool or Symbol Hub.

Strategy Chooser

You'll always be able to see the option approval level of your account. If you need to know exactly what strategies are allowed for your approval level, you can jump to schwab.com using the quick menu at the top of the platform.

Link tool  

The Link tool allows you to specify which tools get updated when you change a symbol.

Link Tool 1

For example, if I’m checking quotes in the trade tool and I change symbols, I may want that same symbol to appear on a chart and in the news window. I might also have a second chart or news window open to monitor a different symbol. If I want that second chart and news window to stay on that specific symbol all the time, I can do that too, by simply assigning it a different geometric shape.

Link Tool 2

Estimated cost, maximum gain, breakeven and maximum loss calculations  

If you don't know how much you’re about to invest, or what price level the underlying stock, ETF or index has to reach before you start making money, how can you know whether your strategy makes sense or not? StreetSmart Edge can help by displaying these values (not including commissions or other costs) in the Trade Tool or Symbol Hub as soon as you select the strategy and the price at which you are willing to trade1.

Estimated cost, maximum gain, breakeven and maximum loss calculations
Estimated cost, maximum gain, breakeven and maximum loss calculations

Estimates and market data shown are for illustrative purposes only.

Open interest put/call ratios (P/C Ratio – OI)  

This ratio is calculated as the total number of outstanding puts divided by the total number of outstanding calls for an individual stock, ETF or index. I have found the easiest way to view the P/C Ratio-OI is to put the study directly on top of the stock chart, and select "Show Value" so the ratio value shows up at the top of the chart.

Open interest put/call ratios
Open interest put/call ratios

Symbols and market data shown are for illustrative purposes only.

Additionally, if you prefer to smooth the line out a bit and look at longer-term trends, you can select "P/C SMA" and specify the exact period of time over which you want the simple moving average to be calculated. You can add this type of study by either right clicking your mouse or opening the study sidebar located on the right edge of the chart.

Volume put/call ratios (P/C Ratio — Vol)  

This ratio is calculated as the total number of calls traded divided by the total number of puts traded during the day, for an individual stock, ETF or Index.

StreetSmart Edge allows you to display both the open interest put/call ratio and the volume put/call ratio within the Trade Tool or Symbol Hub. This way, even when you aren't trading options, you’ll still have a snapshot of options-related data that you might consider relevant when you're trading the stock. 

Volume put/call ratios (P/C Ratio — Vol)

Symbols and market data shown are for illustrative purposes only.

You can display either or both of these ratios by turning them on in the Level I Settings menu.

Volume put/call ratios (P/C Ratio — Vol)2

Option chains  

StreetSmart Edge can display options that expire on the regular monthly expiration (the Saturday after the third Friday of the month) and LEAPs options, as well as weekly and quarterly expiring options in a single view.

All of these options have very similar contract terms; the only real difference is their time period and the day of the month on which they expire. Weekly options expire each Friday, except during the week of the regular monthly option expiration or if a quarterly option expires on that day. Quarterly options expire on the last business day of the calendar quarter. LEAPs usually expire in June, December or January, depending on whether the underlying security is an index, equity or ETF.

While weekly and quarterly options are identified for you in the options chain, in the picture below I have also identified the monthly and LEAPs call contracts on a fictitious stock YYS. You can display the entire chain of strike prices for any of these expirations by clicking on the small arrow to the left of the expiration date, then drill down into a specific option contract once you select the strike in which you're interested.

Option Chains

Symbols and market data shown are for illustrative purposes only.

Options filtering  

A set of options filters can help you narrow down your choice of options if the full chain is too much to sort through. You'll find these filters located on the "Option Chains" tab of the main settings window at the top of the StreetSmart Edge platform.

Options filters

Using these filters, you can choose whether or not you'd like your option chains to display weekly, quarterly and/or adjusted options, or just the standard monthly and LEAPs options.

Theoretical view  

An important aspect of any option-trading strategy is the ability to estimate the value of your positions based on changes you expect to occur in the underlying stock, ETF or index. For example, if you buy a long call option because you think the underlying stock will increase four points in two weeks, you should be able to estimate how much theoretical profit (if any) you'll make on your option if that occurs. Further, you should probably estimate how much profit you'll make on several different call options, so you can buy those that have what you consider to be the optimal balance of profit and risk, based on your investment style.

When you view option chains on StreetSmart Edge, you can switch from Basic view, which provides real-time prices and Greeks, to Theoretical, which allows you to simulate the changes you expect and compare the theoretical prices of the options to the current prices. This can be done for a whole range of strike prices at the same time.

In Theoretical view (highlighted with a green box) you can choose any of three different pricing models for your calculations. Additionally, you can increase or decrease any of the five variables (underlying price, days until expiration, implied volatility, interest rates, and dividend yield, all highlighted with a red box) that affect option prices, and see how the theoretical prices compare to the current prices (highlighted with a blue box).

If your expectation is correct, by comparing the theoretical values to the current ask prices, you can calculate the following theoretical outcomes:

  • The 190 call options would increase approximately $2.23 or 25%
  • The 195 call options would increase approximately $1.79 or 32%
  • The 200 call options would increase approximately $1.18 or 37%
  • The 205 call options would increase approximately $0.58 or 35%

Also note the theoretical delta (highlighted with a purple box), which tells you the approximate probability of each option expiring in the money once the stock has already moved four points. With this estimate, you should be able to make an informed decision about which option is best suited to your trading style.

Theoretical view

Symbols and market data shown are for illustrative purposes only.

Slider bar

If you've ever looked at an option chain for a nominally high-priced stock or index, or for a stock that has risen or fallen a very large percentage over the past year or so, the sheer size of the chain can be a bit daunting. StreetSmart Edge has a slider bar that lets you adjust the number of different strike prices to be displayed.

With the strike price closest to the underlying price as a starting point, you can use the slider bar to select any number from one to 20 or you can opt to show all available strike prices. As the number to be displayed increases, it will add strikes that are incrementally further away from the money in both directions.

In the example below, I've used AAPL because it's a nominally high-priced stock with a large range of strikes. If your trading style typically involves trading those strikes that are only slightly in or slightly out of the money, next time consider narrowing the scope of the display.

Slider bar
Slider bar 
Slider bar

Symbols and market data shown are for illustrative purposes only.

I hope you find this information about StreetSmart Edge helpful. In the second part of this series, we’ll discuss even more features.

Good luck and good trading.

How to Use StreetSmart Edge Tools
How to Use StreetSmart Edge® Tools
Managing Risk Using Options: Equity Collars and Cash-Secured Equity Puts
Managing Risk Using Options: Equity Collars and Cash-Secured Equity Puts

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