ThinkorSwim Tutorial - Setting Price Slices on Risk Graphs and Stock Charts

This tutorial explains how to simulate the changing of all parameters on your Risk Graph in the ThinkorSwim Trading Platform. By the end of this article you will be able to analyse on your own the Risk and the probability of success related to your investment. If you find this tutorial interesting read also: Think or Swim Tutorial - Risk Graph Analysis.

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 Analyse Tab on the top of the ThinkorSwim platform, go into the Risk Profile section. Here you will find your Risk Graph. The red line of it shows your profit at the expiration date. 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.

Price Slices is a powerful section of the Risk Profile section in Think or Swim. Each slice represent a stock price and it is showed as a vertical line on your Risk Graph. For each slice you have several interesting information which you must be aware of. You can analyse the Greeks (Delta, Gamma, Theta, Vega), the Profit/Loss (P/L) at the open, the P/L of the day and the Margin Required that is the amount of money involved in your investment and also the maximum loss you can get. For each slice you can directly type in a different price and you can also set as many slices as you want simulating different scenarios.

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

How to set Price Slices on your Risk Graph

To analyse in a proper way your actual level of risk you should set the Price Slices to you Risk Graph. To do that go below on the “Price Slices” menu and click on the button Set Slices on the right. Then click on Breakeven and choose the expiration date of your strategy. Doing that you will be aware of the range within your strategy is profitable. Moreover, if you click on “Add Slice”, you will add a slice at the current price of the stock.

Visualize Price Slices on the Stock Chart

Another essential feature in Think ok Swim is the possibility to put your breakeven slices (breakeven point - BEP) on the chart in order to check if the strategy you are preparing is in line with the expected movement of the stock and your technique analysis. To do that click on Set Slice to Charts. The software will show you straight your slice (that are your BEPs) on the chart and you will be able to easily check if the BEPs are in proximity of the support and resistance points you have identified before. I personally find this feature great.

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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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Once you have created your strategy, you can literally simulate anything you want on your Risk Graph. To do that go down below on the “Positions and simulated Trades” space on the bottom of the Risk Profile Tab. Here you find your strategy and directly above it on the right you have once again a little calendar named “Date”. You can literally simulate the flow of time and check what happens to any parameters of your position.

Below the calendar you find a little wrench. If you click on it you will have a series of parameters to change as you like:

• Stock Price, you can simulate a changing in the stock price and see what happens to any Slice parameter if the price rises or falls, while the time is flowing.
• Volatility (Vol Adj), you can simulate a changing in the Implied Volatility (IV) and see what happens to any Slice parameter if it increases or decreases, while the time is flowing and even the price is changing.
• Interest Rate, you can simulate how a changing in the Interest Rate can influence your trading position.

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.

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

In the next GroWithYou Trading Tutorial:

• How to Analyse and Manage the Risk of your Options
• How to create an Option Strategy - Simulating a “Calendar”

Keep learning about Exercising Stock Options by going to: Think or Swim Tutorial - Risk Graph Analysis.

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