Track 'n Trade Futures End of Day Options
Options Tab Tour
In this Track 'n Trade Pro Options trading training video, I want to just talk to you about the Options Data Tab. That's this button right here. We click it, and I'm going to slide the window open. What it gives us, is it gives us a view of all the data that comes through for our Options.
Notice that the first column is our Strike Price, the second is whether it's a Put or a Call. Then, we have our Premium, our Dollar Value, the Change, the Difference, the Sigma, Delta, Gamma, Theta, Vega, and Rho. For those of you who are interested in the Greeks, they're calculated right here at the end.
Now, we can sort these by Strike or Type. So we come in here and we click on the header, and we sort them down by Strike, from the smallest to the largest. Or we can sort them by Type and we can categorize them by Calls or Puts. Or we can sort them- when we put, when we go back and sort them by Strike, then it puts them every other one: Put, Call, Put, Call, Put, Call.
Now, I want to come up and I want to show you the Calculator. That's this button right here. When we click on that button what we see is the traditional Options Calculator, then we come in here and the way this works is we simply Add New. Then we put in our option that we're interested in either buying or selling. Let's say we're interested in Buying (1) 270.00 Call. We go ahead and hit Okay. That gives us this little chart here.
This is a traditional options chart that tells us the increasing value of an option as the underlying futures market increases in value. As the underlying future market goes up through these different strike levels, then the value of the option would increase like this.
Of course, you can go through and you can add more options to the calculator, if you're going to do some kind of a strategy; such as a Strangle, or a Call, or something like that. You can add in different options that you're interested in buying to create that straddle or that different option strategy. Then, it will calculate and tell you the profit potential of that strategy. Once you've got that strategy built into your system, or into your calculator, all you have to do is hit place orders, and it will automatically take that strategy and place it on the screen for you and put it into the Accounting system to begin calculating your profits and losses.
So, I'm going to hit Cancel at this point, and I'm going to come back in here. The next one I want to show you is, of course, this is set on Date, so that we're sorting everything on date. This is just today's date for these different options. Okay, so this is Tuesday 20th of January, 2004. That's just the date for today. If we step the market forward 1 day, that's all the data now calculated that we receive and generate for that day. As you can see there's a lot of data for every single strike for every single commodity for every single day throughout the system.
The next screen I want to show you is the Strike. Now, this button here, when you hit Strike, we can look at the history on 1 individual strike. Let's say we're interested in the 370.00 Call. So, we click on here, and we scroll down until we find the 370.00 Call. We click on it, it fills in all the fields for just the 370.00 Call and the history of just the 370.00 Call.
The first date that's generated for the 370.00 call was 10/17/2002. As we scroll down, you can see how the premium increased or decreased in the Dollar Value increased or decreased, the Change, the Difference, the Sigma, Delta, Gamma, Theta, Vega and Rho for each individual item along this one particular strike. This 370.00 call history.
The next one I want to show you is the Rate. This is where we input for you the Periodic Interest Rates. This comes down with the data download service. Every month, we will insert another interest rate, because to calculate theoretical value of an option with a Black & Scholes model, this is one of the numbers that we need. We use this number to calculate and help us know what the theoretical value is, so we could do the OSV indicator, the strike indicator, and then wherever there's not any data coming down from the exchange for a particular strike or a particular option for a particular day or time, we can then calculate a theoretical value and input that into our accounting system to maintain our profit and loss savings.
Now, I want to come back over here to the date selection. And I want to just point something out for you real quick. When we go down through here and we calculate these different premiums and values for you, often times we have real live market data. And then like I mentioned earlier, sometimes we have a gap or a hole in the data.
Because of the enormous quantity of data that comes down from the exchanges, there's very little done to try to repair or fill holes, or repair a bad data tics within the options data stream. So what we do at Gecko Software is where we get gaps or holes, or there's not an option that's trading for a particular day, so no data comes down. We go ahead and we insert the Black & Scholes data into the formula or into the data stream to let us know what the theoretical value of the option was that day, because we didn't get the actual value of the option that day.
That allows our simulation services or our simulation application to to be able to continue to actually simulate the market day to day and give you a profit and loss based on your trade. If we didn't use the simulated data in there, we would go days and weeks sometimes without receiving any data for a particular option and your simulation would not feel as real or as complete, because it's not giving you profits and losses everyday like it really should.
So, where we don't get some data from the exchanges, we insert, the Black & Scholes theoretical data. We denote that with a little asterisk. You'll notice right here as we come down, some of these options have asterisk's by them indicating that for that day it's a theoretical value that's calculated. What we generally find is that on the further out of the money options, we have more gaps and more holes, so we have to insert more theoretical data into the out of the money options.
The closer to the in the money the strike is, the more likely we are to have current, good quality market data.
The volume on the open interest is much higher in those particular strikes.