ThinkorSwim Tutorial - The Spread Hacker and Scan Criteria for Options Strategies

This tutorial explains how to use the Spread Hacker tool in the Think or Swim Trading Platform. By the end of this article, you will be able to scan complex Options Strategies by selecting the correct search criteria and the specific scan list you desire. If you find this tutorial interesting read also: ThinkorSwim Tutorial - The Stock Hacker and the Options Scan Criteria.

The Spread Hacker is a ThinkorSwim scanning tool specifically used to look for Options Spreads. You can use it to literally scan through over 100000 Options. You can choose to scan every single Option in the universe or make your scan better by selecting specific public Stock lists (S&P, NASDAQ, RUSSEL, etc) or personal Stock lists. Think or Swim does all this scan activity in real time for you.

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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 ThinkorSwim, you can find the Spread Hacker tool in the Scan Tab on the top. Clicking on it you find three different sections: Stock Hacker, Spread Hacker and Spread Book.

Go to the Spread Hacker section and choose a list to scan. You can search through the following spreads: Vertical, Butterfly, Iron Condor, Calendar, Diagonal, Double Diagonal. Whenever you start a search in this tool you have to know what you are looking for. The criteria you should select are the ones that suit your investing strategy the best. Here you can set several Scan Criteria for each strategy mentioned above. You can simply do that by clicking on Add Fundamental Filter and set as many new scan criteria as you would like to utilize.

You can choose from the following Scan Criteria:

• Underlying Price. You have to choose the range of price you are interested in. You may feel more comfortable trading on underlying (stocks) with min price $10 and max price $20 or min price $50 and max price $100. You can choose to enlarge or narrower the range.
• Days to Exp. Here you can set how many days to expiration. If you are interested in income strategies in which you sell Options, you would like to sell Options within 20 and 35 days to expiration to benefit the most from the effect of the time decay. If you are interested in strategies in which you buy Options (such as Straddle or Strangle), you would like to buy Options with at least 120 or 180 days to expiration to minimize, in this case, the negative effect of time decay.
• Delta. It is the Greek that represents the direction of the trade. This value is included within -1 and +1. If you are bullish, select a slightly positive Delta; if you are bearish, select a slightly negative Delta.
• Mark. It is the middle price between the asking price and the bidding price. Not necessarily you need to set these criteria for your search.

• Prob of Profit. It is the probability of Profit you wish for your trade. You may set a probability between 60% and 75% for your trade.
• Max Profit. It is the maximum Profit you wish for your trade.
• PL/Margin. It represents the margin you must have in your trading account if you want to sell Options. For example, if you sold a Vertical Spread with spread 1 (difference between strike prices) and your credit is $30, your net debit will be $70 (difference between the 2 strike prices - the net credit received). In such a case, you have to consider that the margin required by the broker will be $100 and you cannot utilize such amount of money until the expiration of the trade. You can set these search criteria in order to meet your personal money management needs.
• Front Vol. It represents the front month volatility.
• Back Vol. It represents the back month volatility.
• Vol Diff. It represents the difference between the front month volatility and the back month volatility.

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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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About Volatility, you may be interested in setting these criteria when you want to trade Options with different expiration date in which you desire to have high Implied Volatility (IV) for the Options you sell and low Implied Volatility (IV) for the Options you buy in order to maximize the potential Profit of your trade. You may look for Options with min Front Vol at 30% and max Back Vol at 30%. In this way, you will be looking for Options to sell (expiration date about 30 days) with minimum IV 30% (you are selling Options and you want to sell High IV and get a higher credit) and Options to buy (expiration date not less than 90 - 120 days) with maximum IV 30% (you are buying Options and you want to buy Low IV and pay a lower debit).

To better understand why you want to sell high IV and buy low IV, you need to know how the price of Options is made up. For further information visit: Think or Swim Tutorial - The “Black-Scholes Model” - How to determine the price of Options.

After setting all the query criteria, you just need to push the “Scan” or “Search” button. In a few seconds, it will appear a list with all the Options Strategies available for those criteria. If you are interested in a particular trade, you just have to push on the blue dot on the left side of the trade and select “Create Duplicate Order” or, if you want to analyse it first, “Analyse Duplicate Trade”. In this way, you will be able to place your order or to analyse it first to check if it meets your trading rules.

You can change your search criteria at any time, but remember that after having changed them you need to click again on the “Scan” or “Search” button to have a new search done. You can even save one of the trades got from a query by clicking on the small padlock on the right side of the trade you are interested in under the column “Pin”. When the padlock is locked you can change your search criteria without losing that selected trade.

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

In the next GroWithYou Trading Tutorial:

• How to utilize the Stock Hacker in ThinkorSwim
• Scan criteria related to Options Volatility
• How to choose your Scan Criteria - Examples

Keep learning about ThinkorSwim and Stock Options by going to: ThinkorSwim Tutorial - The Stock Hacker and the Options Scan Criteria.

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