Hi Coach Tim,Could you please help me with this trade (attached file)?Basically, I have been learning to do a call ETFC, I bought 9 Feb 18 53 Call and currently my monitor showing those numbers which make me so confuse, I dont know what position am I….Thank you so much Coach T,
Thanks for emailing and I believe I can help you understand what you have here. I’ve added those flashy yellow bubbles, with numbers in each, to help you identify each component that you need to understand when reading a position statement in ThinkorSwim (TOS).
2. Days til Expiration
5. Expiration Details
6. P/L Open
7. BP Effect
Quantity – Your quantity says -1. Which means by definition you have sold a call option. You may have intended to buy a call option, but in fact, this is showing that you have sold one. Now, depending on how you got to this point, this may raise questions or produce confusion to you. To identify how you built the order, what happened (if there was a mistake) or if you exited an old trade incorrectly you will need to go back to your order history statement.
Days til Expiration – If your intention was to buy the call, you don’t have enough tim until expiration based on the rules in your Master Playbook. Remember, when buying calls you need 60 days + the PAY expectation. In this example, you have 25 days…which is more in line with selling calls.
Mark – this column will help you identify the value of both the underlying and your option position. The stock here is worth $53.94 and the option is worth $2.13.
Delta – The delta column is a total delta which is calculated by taking the per contract delta and multiplying it by the total number of contracts in your position. Since you have -1 contract, the delta on a call option in this position has a Negative number (-#) showing. I see that you have a -61 delta, which is the delta you would have wanted to choose if you were buying a call. Nice job on this.
Expiration Details – this lists the expiration the way an option trader uses the information. Here you see 9 FEB 18, which means the 9th day of February in 2018.
P/L Option – this column measures the Profit or Loss in the trade since you opened the position as it is listed in your statement. In this example, the number is in parenthesis ($60.18) which means you are losing that amount of $ in your trade. Unfortunately, since you intended to buy this call, this should have been a positive, which might be what induced the question and confusion to begin with. But, because you have sold this call, and the value has changed against you, there is a loss in this trade.
B/P Effect – This column stands for Buying Power Effect (BPE) and it lists the cost for you as a trader to maintain the position. If the number comes in as a positive, that means the broker is adding extra money to your option buying power and available funds to trade with. If the number is in parenthesis, then it is a reflection that you have a credit trade which requires margin to maintain. Because this trade is a Naked Call, you have to hold margin to maintain the position. Here, that is listed as ($1291).
Remember, learning your broker software is generally one of the toughest learning curves for brand new traders to climb. But, it’s important to get proficient at using it, and understanding what you have. Practice a lot, study a lot, engage the team in the clubhouse, coaches shows and coaches lounges and you will get it down much faster. There are great resources on YouTube to help you with ThinkorSwim as well here:
And, make sure you’re using the resources at www.tackletrading.com to help you as well.
Have a successful week!