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This is a program to allow the user to enter several option positions on the same stock and same expiration, and it will show a graph of the profit at expiration.
The Expiry dates are in format 'yymmdd'.
Options with low volumes may not reflect current prices. Average of bid, ask is a better indication.
Clicking on a line in the table will show an alert box with more information on that option, and circle the option on the graph
Clicking on the graph will pop-up information on the nearest option.
'Annualized Return' is a theoretical construct for comparing different options, assuming you sell the option and make the value of the time premium at expiration.\nThe return is calculated as the % of time premium/Strike price multiplied by 365/days left
The program is started by providing the symbol of the stock of interest. It then retrieves the most recent stock and option prices from the Yahoo Finance website. Unfortunately, Yahoo usually clears the bid and asked prices at about 1 AM Eastern Time (10 PM Pacific Time) before the market opens, so this program will not be able to operate during those times. Prices are usually available all weekend long, until 1 AM Monday Morning Eastern Time.
The program header will show the stock symbol, date, and last stock price. The stock symbol is a live hyperlink to the Yahoo option page for the stock.
Standard options expire on the 3d Friday of each month, but many stocks now also have weekly options expiring on the other Fridays, distinguishable only by looking at the yymmdd date and mentally figuring which Friday they represent. In addition, standard option contracts are for 100 options each, but many expensive stocks and ETFs now also provide 'mini' contracts of only 10 options each, distinguished only by a '7' at the front of the date. And for the high-rollers, a 'J' in that position indicates a 'Jumbo' contract of 1000 options. And all these are in the same table!
In the SPY example given here, there were a total of over 3100 separate options listed. And if you looked at the 'straddle' views, there would be 3 or 4 times that many rows in total.
So the first thing this program does is unscramble this mess and let you see only the ones you want. The Option Type table lets you choose. To wit:
The 'Hide/Show' buttons let you toggle off display of Weekly, Mini, or Jumbo options to minimize the clutter.
The default is to show weekly and monthly standard sized options.
Here's what our SPY example looks like with all options shown. The weekly options are given a blue background. The standard monthly options are left white.
To see strangles and collars, you will need to select both the call and put boxes for the date.
You can select options for more than one expiration date, but they will only be matched with options expiring on the same date.
Beneath the table are other selections which are self-explanatory:
Show only options with volume equal or greater than
You may notice that option prices may appear far out of line, especially far from the money. There are many reasons for this: low volume, last trades that occurred when the stock price was different, etc. On the other hand, the mean bid/ask line is usually quite smooth. This is because it is set by the computers of the big arbitrageurs (banks, hedge funds, etc.), all using similar models for what the price ought to be.
We use the word "stock" here to refer to any underlying security on which options can be written, such as stocks, exchange-traded funds (ETFs), indices, commodities, etc.
We use the word "combo" here to refer to any combination of long and/or short positions in a stock and/or its options with the same expiration date. I.e. the program does not support calendar spreads.
We recommend that you use this help file by Right-clicking on the link on the Option Combo main page, and from the resulting context menu, selecting "Open in a new window". That way you can move and size this window independently of the main window, and can show both windows at the same time for easier reference.
Options are sold in contracts of 100 options, but prices are quoted for single options. Similarly, stocks are sold in round lots of 100 shares, but prices are quoted for single shares.
The numbers you enter will be the number of option contracts or round lots of stock, but the prices will be for single options or shares, so your actual costs will be 100 times greater.
Unlike the table above, which was in terms of individual options or shares, Commissions are usually quoted on the basis of contracts or round lots of 100.
If you have your trading account with one of the common online brokers, you can select their name from the drop-down list just above the commission table, and that will insert the parameters of their commission formulae into the table. Or you can enter any broker's parameters in the boxes yourself.
The graph plots the stock price at expiration on the X-axis, and the profit at expiration on the Y-axis. Remember that these plots are for single options or shares, while you will be dealing with contracts or lots of 100, so the real-world profit or loss will be 100 times that shown on the the Y-axis.
Note that before expiration, profits can be very different from what they would be at expiration, and pre-expiration option prices are often far from what Black and Scholes might predict.
The Put components of the hedge are plotted in Light Red
The Call components are plotted in Light Green
Stocks are plotted in Light Blue
The totals are plotted in Heavy Black
The graph is drawn to cover the range of stock prices over which changes of slope of the profit line occur, so a line which intersects the borders of the graph can be expected to proceed indefinitely with the same slope.