ThinkorSwim Tutorial - Probability Analysis, ThinkBack and Options Risk Profile

This tutorial explains how to analyse the Options Risk and the Probability of success in the “Analyse” TAB of the Think or Swim Trading Platform. This tutorial follows the trading guide: ThinkorSwim Tutorial - Analyse TAB and Options Risk Profile. Before reading I recommend visiting the Link above.

How to place the most rewarding options strategies from scratch? Visit my website at www.FromZeroToOptions.com to get tutorials, instructions, articles and much more stocks and options related.

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In the Risk Profile section you have a chart showing your Risk profile. The profit is showed on the y-axis and the stock price on the x-axis. The red line of this Risk Graph shows your profit at the expiration date. You can see this date on your chart on the left corner on the bottom. The white line shows, instead, your profit today. It means that if the price was stuck along this period of time you will earn the amount of money showed on the red line at expiration. In this kind of strategy you earn when the time goes and so the Time Decay is completely at your advantage.

From the chart you can check your maximum loss and your maximum potential profit. In this way you can establish if the strategy is worth or not. Then if you click and drug on the chart you can move it. If you click and drug on the stock prices below the chart you can easily make it larger or tighter. What makes this section interesting is that, at this stage, you can simulate whatever you want about your investment.

To set your Risk Graph and simulate the changing of all Options parameters take a look at: ThinkorSwim Tutorial - Risk Graph Analysis.

Another amazing tool in Think or Swim is the possibility to check how the stock will move until the expiration date. The Probability Analysis is very powerful and it can be directly set on the Risk Graph by clicking on the little calendar on the top right corner of the Risk Chart called “prob date”. If you set it at the expiration date you will exactly know the probability of your trade to be within your breakeven at expiration. You can even make your analysis deeper by going on the “Probability Analysis” menu. Here you will see all the probability at different expiration date and check if your price slices are within these probability or not.

Free Tutorials - Stocks, Options and ThinkorSwim. Click Here.

This section allow you to simulate any trade in the past as it was today and directly check the profit and loss of your trade. It works exactly as the “Add simulated Trade” section with the difference that you can choose a date in the past and have for that time all the options available with related strikes and expiration date. Once you’ve selected the stock and the period you wish to test, you can select the options you desire and create any strategy you want. Then you can check below in “Backtrades” your trade and set anything you want as you were operating today. What is really interesting is that you can change the “P/L Date” in the Backtrades section and see how your parameters and your P/L Open change. Using this tool is definitely the best way to practise all the investing strategy you have learned.

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Do not forget to visit my website at www.FromZeroToOptions.com to get tutorials, instructions, articles and much more stocks and options related.

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In conclusion, the Analyse Tab in Think or Swim is literally an amazing tool. It takes some time to get used to it, but when you do, then I’m sure you will enjoy it as I do. Once again I want to suggest you to practise all the information you found in this tutorial directly on the Think or Swim platform. If you have any question just send me an e-mail.

If you find this tutorial interesting read also: ThinkorSwim Tutorial - Analyse TAB and Options Risk Profile.

Free Tutorials - Stocks, Options and ThinkorSwim. Click Here.

In the next GroWithYou Trading Tutorial:

• How to set Price Slices on your Risk Graph
• Visualize Price Slices on the Stock Chart
• How to simulate the changing of all parameters on your Risk Graph

Keep learning about ThinkorSwim and Stock Options by going to: ThinkorSwim Tutorial - Setting Price Slices on Risk Graphs and Stock Charts.

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