setup option chart trading

S

status1

Well-known member
Is there a way to trade from the option chart ?
I am guessing probably not but it doesn't hurt to ask
The problem with the option chart is that it's set up to use the last price so the market can move around but the price on the chart looks like it moves very little if at all
 
Yes, you can copy/paste the option OPRA code into a chart window in TOS (not the Risk Profile window in the Analyze Tab). Then, you can use Active Trader to trade directly from the chart window. I utilize this technique daily using SPY ATM or near-the-money options. These highly liquid options will move enough to make decent money using a 2 or 3 (or more) lot, and patterns are easily discerned from these options. However, as you suggested, OTM options don't move much intraday.
 
Thanks, I understand how to view it on the chart it's just that this was about 2 strikes ITM so I would think it would be still trade actively unless I am wrong about that
When I look at the active trader it looks like it's moving around but on the chart it's just standing still in some places
I have a feeling that the option chart is using the last price instead of the mark so that's why it's not showing all the price changes when it is in a narrow channel and only moves a few pennies up and down It's only when it moves a lot more than you see it on the chart

I was looking at the .SPY230303C401 yesterday but for some reason when I look at it now it looks like somehow it was updated and it shows all the price moves
Looking at the Monday expiration .SPY230306C401 today you can see some areas where there is no movement in the 13:44 to 13:58 EST time frame and also a little later on in the day

In a longer time frame this would not make much of a difference but in a 0 DTE time frame getting in and out at certain price could make the difference in getting filled or not
 
Strikes which are 2 points OTM definitely do not have the same movement as the ATM strike. Yes, I believe that the LAST is plotted rather than the MARK. In any event, I have not had any problems with visualizing price movement and patterns when I use a 1 or 2 minute chart of the ATM strike. For day trades I choose the expiration 3 or 4 days out to avoid the theta decay problem. I suggest that you spend a few minutes watching the price action on the Active Trader DOM to get a feel for the option's movement.
 
Looks like if the expiration is 3-4 days out even the ATM would not show much movement on the chart until it gets closer to expiration

I was wondering if it may be better to choose the strike slightly ITM maybe 2 strikes that way as it moves in the positive direction the theta decay would be less and also the delta would be higher making the p/l increase faster than if it would be ATM
 
I guess the "amount of movement" is relative. Since I only trade 2 or 3 contracts (day trades only), I am only seeking relatively small movements and returns to supplement my other day trade strategy and Boxcar. For example, in the last 3 trading days, my approach has yielded: +$230, +$65, and -$56 with 2 lots traded. I have a friend who regularly trades 100 to 200 SPY contracts daily and makes $3000 to $10000 a day. He trades ATM contracts only. Good luck with whatever approach you choose.
 
DGH said:
I am only seeking relatively small movements
Click to expand...
That was my idea as well I just thought that as it moves in the positive direction the delta is getting closer to 1 so the trade will reach the profit target sooner with an equal amount of movement of the underlying but as you say it's all relative
 
Rickbw123 said:
Can I ask what Option Chart this thread is referring to
Click to expand...
This was referring to an option chart like this where you see some dashes where there is some small amount of trading when you use the active trader but the price movement is not reflected on the chart
 

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I figured out the problem with the chart
I was looking at adjusting something on the chart for some other reason and I was looking at the option settings and I found that it was set to last so I changed it to mark and now I see all the price action
 
One observation I found with this setting is that the chart takes a few seconds to load when changing strikes compared with the Last setting it loads right away Probably that's why it's set to Last by default in the settings
 
Unfortunately this trick doesn't work on /ES It makes no difference if I set it to last or mark although by looking at the active trader it seems to be real there was a point at 9:58 the 4045 put was stuck at 20.5 showing no movement for 2 minutes than it gaped down to 13 as Powell started speak at 10AM than it started trading for a while than back to random 2 min gaps and no trading

Does /es options not trade as much or it's just not being captured on the chart and active trader ?
/MES is even worse the 4045 put has one bar at 15 at 9:45 than the next bar is at 10:16 at 33 and no trading after that

Does anyone trade /es or /mes options or just the futures ?
I see on the active trader the bid/ask prices move up and down but the price does not move at all so how is anyone supposed to trade these products when you have no idea what is the real price also the bid/ask prices sometimes widen for a second and than narrows down Seems like a bad recipe for bad fills
 
Futures options are difficult to trade successfully, and the commissions are expensive. The futures contracts are much more liquid.
 
True, futures trading is not for the faint of heart. It requires good chart reading skills in terms of directionality, recognition of strong support and resistance levels, nimble fingers, quick reaction times, and rigid adherence to risk management protocols. I always recommend paper trading for at least 6 months before going live.
 
Does the /ES options supposed to trade the same hours as the futures ?
On the active trader it looks like there is some small movement but on the TOS chart it looks like the options are stopped trading at 4PM on the previous day
 
ES options (and other futures options) trade in the extended session. Make sure that you have your "Settings" configured so that "Show Extended-Hours Trading Session" is checked. This will enable options prices to show on the chart.
 
Thanks, I had it set on the futures page but I just realized it has to be set on the options page
It's working now

I am thinking maybe trying to trade on the pre market news like this morning after the unemployment announcement and enter after the first bar which usually sets the direction than perhaps after the market open it may have some follow through
 
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