TT - KYO: AAPL Calendar, 02/24/14

TastyTrade - Know Your Options

LIZ & JNY explain how a calendar in AAPL works.

What is a Calendar spread?

1. You sell the front month and buy the back month of the same strike.
2. Since you are buying the more expensive option, your risk is the debit that you pay.
3. Make sure your debit is less than the value of the short option, as this is used to forecast the future value of the Calendar.

How do Calendar spreads make money?

1. IV increases, or
2. The underlying moves to your strike at expiration, or
3. Time passes without the underlying moving.

• Calendar entry criteria:
• Low IV Rank!
• Open on Monday following monthly expiration Friday.
• Front month DTE should be around half of the back month DTE.
• Generally choose the first OTM strike.
• You want the underlying to go to your strike, but not through it.
• If it does you should close.
• Exit:
• Home Run: at expiration the underlying is at your strike, and you close out.
• Foul Ball: the underlying moves far away from your strike by expiration. Close out if your strike gets passed by.

SLM Ribbon

The TastyTrade SLM Ribbon is a study set consisting of 3 exponential moving averages: 8, 13, and 21 days.

• Bullish open signal:
• 8-day EMA cross above the 13-day EMA
• 13-day EMA above 21-day EMA
• Open above 8-day EMA (more conservatively: complete candlestick above 8-day)
• Bearish close signal:
• Close below 13-day EMA
• or, 8-day EMA cross below 13-day

End of Year Accounting

1/2/14 - Happy New Year!

While watching Swim Lessons today I learned something new and useful. Now that it's 2014 you may have noticed that the year-to-date totals on your TOS Account Statement have reset. Here's an easy way to look back at 2013.

TOS Tip: Adjusting Cost Basis in TOS Risk Profile

11/24/13

When analyzing a position with Thinkorswim's Risk Profile it isn't accurate if you modified the original trade by rolling, closing half an iron condor, etc. For example, below is the risk profile for a current position in JCP.

• BTO +10 Jan14 11 C
• STO -10 Dec13 8 P

It shows I am currently up $170, with a max profit of $190 at Jan expiration if JCP stays between 8 and 11. This is confirmed by checking the closing order, which would be a debit of $20. However, TOS is ignoring my original trade and that I rolled the short puts.

thinkScript: Price Percent chart label

A useful indicator or strength or weakness in an equity is when the price moves up or down 10% in 2 weeks. For indexes this change is 5%.

This Chart label compares the current price with the high and low for the past specified period (default is 2 weeks) and displays the maximum price change. When the default threshold of +/- 5% is reached the label will turn red for a loss and green for a gain.


####begin study: TT_PricePercent
#
# Hint: From TastyTrade. Takes the high and low close for the specified period and compares to the current. The greater change is displayed as a percentage in a label.
#
# length is # of trading days. 10 = 2 weeks.
input length = 10;
input price = FundamentalType.CLOSE;
input pricePercentUP = 5.0;
input pricePercentDOWN = -5.0;
#
def priceday = Fundamental(price, period = aggregationPeriod.DAY);
def high = Highest(priceday[1], length);
def low = Lowest(priceday[1], length);
def PcntChHigh = 100 * (priceday/high -1);
def PcntChLow = 100 * (priceday/low -1);
def PercentChg = if(AbsValue(PcntChHigh) >= AbsValue(PcntChLow), Round(PcntChHigh, 2), Round(PcntChlow, 2));
#
AddLabel(1, Concat ("% Chng: ", PercentChg),if percentChg >= pricePercentUP then color.DARK_GREEN else if percentChg <= pricePercentDOWN then color.RED else color.GRAY);
#
#####end study.

TOS Tip: Custom Quotes

Thinkorswim allows 19 custom quotes for use as customized columns. They can be used on the Trade tab, Stock Hacker Scans, and Market Watch Quotes.

In order to use the Custom Quotes you must first be on one of the screens that support them. Right-click on any column heading and select Customize.

Type 'custom' in the search box that says 'Lookup a column...' This will filter out all but your custom columns, even ones that you rename.

Click the scroll icon for the custom column you want to edit. Click on the thinkScript Editor tab and delete any code that exists. Copy the desired code and paste it on line 1. Fill in the Column name to match.

After customizing each column they must be added to the current display set. You'll probably have to remove some of the existing columns to make room. Make sure that you save the Workspace so that your customizations are easily recalled.