Getting Started

Welcome to OptionsKit for iOS! This app is your comprehensive tool for analyzing and strategizing your options trades on the go. Whether you’re a beginner in options trading or an experienced trader, this guide will walk you through every feature of the app, ensuring you can maximize its potential.

Table of Contents

1. Introduction to Options Trading

2. Creating Your First Strategy

3. Adding Option Legs

4. Editing Option Leg Data

5. Removing Option Legs from a Strategy

6. Viewing the Profit/Loss Table

7. Viewing Profit/Loss Outcome Details

8. Adjusting the Profit/Loss Table

9. Refreshing Option Data

10. Using the Option Finder Tool

11. Tips and Best Practices

12. Frequently Asked Questions

13. Support and Feedback

14. Conclusion

1. Introduction to Options Trading

Before diving into the app’s features, it’s essential to have a basic understanding of options trading.

What Are Options?

Options are financial derivatives that give the holder the right, but not the obligation, to buy or sell an underlying asset (like stocks) at a predetermined price (strike price) before or at a specific date (expiration date).

Types of Options:

Call Options: Give you the right to buy the underlying asset.

Put Options: Give you the right to sell the underlying asset.

Why Trade Options?

Leverage: Control a large number of shares with a relatively small investment.

Flexibility: Create various strategies to profit in different market conditions.

Risk Management: Hedge existing positions against adverse price movements.

Understanding Option Legs and Strategies

An option leg is a single option contract within a strategy. Combining multiple legs can create complex strategies like spreads, straddles, or iron condors to suit your market outlook.

2. Creating Your First Strategy

Creating a strategy is the first step to analyzing potential trades.

Step-by-Step Guide:

1. Launch the App: Open the OptionsKit on your iOS device.

2. Tap the “+” Icon: Located at the top right corner of the screen.

3. Enter the Stock Symbol:

Symbol Field: Type in the ticker symbol of the stock (e.g., AAPL for Apple Inc.).

Strategy Name (Optional): Assign a name to help identify your strategy later.

4. Save Your Strategy: Tap on “Save” or “Create” to proceed.

Tips:

• Ensure you have an active internet connection for real-time data.

• Naming strategies can help you organize if you plan to create multiple strategies.

3. Adding Option Legs

After creating a strategy, it’s time to add option legs.

Understanding Option Chains:

An option chain is a list of all available options for a particular stock, organized by expiration date and strike price.

How to Add Option Legs:

1. View the Option Chain:

• The app automatically displays the option chain for your selected stock.

2. Select Expiration Date:

• Tap the dropdown menu next to the current date at the top.

• Choose your desired expiration date.

3. Choose Your Option Leg:

Buying (Long Position):

• Tap on the Ask price to buy a call or put option.

• Buying a call: Expecting the stock price to rise.

• Buying a put: Expecting the stock price to fall.

Selling (Short Position):

• Tap on the Bid price to sell (write) a call or put option.

• Selling a call: Expecting the stock price to stay the same or fall.

• Selling a put: Expecting the stock price to stay the same or rise.

4. Add Multiple Legs:

• Repeat the process to add additional legs for more complex strategies.

Notes:

• The bid price is what buyers are willing to pay.

• The ask price is what sellers are asking for.

• You can add as many legs as necessary to build your strategy.

4. Editing Option Leg Data

Fine-tune your strategy by editing the details of each option leg.

Editable Parameters:

Quantity: Number of contracts.

• Use positive numbers for buying (long).

• Use negative numbers for selling (short).

Implied Volatility (IV): Market’s forecast of a likely movement.

Trade Price: The price at which you intend to execute the trade.

How to Edit:

1. Access the Edit Menu:

• Swipe left on the option leg you wish to edit.

2. Adjust Quantity:

• Tap on “Quantity” and enter the desired number.

3. Change Implied Volatility:

• Tap on “IV” to input a new implied volatility value.

4. Modify Trade Price:

• Tap on “Trade Price” to set your expected execution price.

5. Save Changes:

• Confirm your edits by tapping “Save” or “Done”.

Important:

• When selling options (short positions), input the quantity as a negative number.

• Editing these parameters can significantly impact the profit/loss calculations.

5. Removing Option Legs from a Strategy

Simplify or adjust your strategy by removing unnecessary option legs.

Methods to Remove Option Legs:

Method 1: Swipe to Delete

1. Locate the Option Leg:

• On your strategy screen, find the leg you want to remove.

2. Swipe Left:

• Swipe left on the option leg.

3. Tap “Delete”:

• Confirm the deletion.

Method 2: Unselect in Option Chain

1. Open the Option Chain:

• Tap on the leg to access the option chain.

2. Unselect the Option:

• Tap on the highlighted option to deselect it.

3. Save Changes:

• Press “Save” to update your strategy.

Tip:

• Always double-check your strategy after removing legs to ensure it aligns with your trading plan.

6. Viewing the Profit/Loss Table

Analyze potential outcomes of your strategy under different market conditions.

How to Access:

1. Open Your Strategy:

• From the main screen, select your strategy.

2. Tap the Table Icon:

• Located at the top right corner.

Understanding the Table:

Rows: Represent various underlying stock prices.

Columns: Represent different days until expiration.

Cells: Show potential profit or loss for each scenario.

Navigating the Table:

• Scroll horizontally and vertically to view different price points and time frames.

• Use pinch-to-zoom gestures to focus on specific areas.

7. Viewing Profit/Loss Outcome Details

Dive deeper into specific outcomes to understand the components of profit or loss.

How to View Details:

1. Tap on a Cell:

• Select any profit/loss figure in the table.

2. View the Breakdown:

• A popover appears with detailed information.

Information Provided:

Theoretical Option Prices: Estimated prices of each leg under selected conditions.

Profit/Loss Breakdown: Detailed calculation including premiums, intrinsic value, and time decay.

Option Greeks (if available): Insights into how the option price is affected by factors like volatility and time.

8. Adjusting the Profit/Loss Table

Customize the table to focus on specific scenarios.

How to Adjust:

1. Tap the Settings Icon:

• Located at the top right corner of the profit/loss table.

2. Modify Settings:

Price Range: Set minimum and maximum stock prices.

Time Frame: Adjust the number of days until expiration.

Price Increments: Change the intervals between price points.

Volatility Assumptions: Input custom implied volatility values.

3. Apply Changes:

• Tap “Apply” or “Save” to update the table.

Tips:

• Setting realistic ranges helps in focusing on probable scenarios.

• Adjusting volatility can show how sensitive your strategy is to market changes.

9. Refreshing Option Data

Ensure you’re working with the most recent market data.

How to Refresh:

1. Navigate to Your Strategy:

• Open the screen showing all your option legs.

2. Pull Down to Refresh:

• Swipe down from the top of the screen.

3. Data Updates:

• The app fetches the latest prices, volumes, and implied volatility.

Important:

• Regularly refresh data, especially during trading hours.

• A stable internet connection is necessary for accurate updates.

10. Using the Option Finder Tool

Discover options that align with your market expectations.

Purpose:

• Find options likely to meet your profit targets based on your predictions.

How to Use:

1. Open the Option Finder:

• In your strategy, tap the magnifying glass icon at the top right.

2. Input Your Criteria:

Expected Price: Where you anticipate the stock price to be.

Minimum Days to Expiration: Your time horizon for the trade.

Initial Outlay: How much you’re willing to spend.

3. Search:

• Tap “Search” to generate a list of options.

4. Review and Select:

• Options are listed with estimated profits.

• Tap an option to add it to your strategy.

Notes:

• Adjust criteria to explore different potential opportunities.

• This tool helps identify options you may not have considered.

11. Tips and Best Practices

Stay Informed: Keep up with market news that may affect your options.

Regular Updates: Refresh data frequently for accuracy.

Experiment: Use the app to test various strategies without real financial risk.

Understand Risks: Options trading involves significant risk; ensure you understand potential losses.

12. Frequently Asked Questions

Q1: Can I execute trades through this app?

A: No, the app is for analysis and planning. Use your brokerage platform to execute trades.

Q2: Why is the profit/loss different from my expectations?

A: The app uses theoretical models. Real-world factors like liquidity and slippage can affect actual results.

Q3: How do I account for commissions and fees?

A: Manually adjust the trade prices to include any expected commissions or fees.

Q4: Can I set alerts for specific price movements?

A: Currently, the app does not support alerts. Consider using a brokerage app for notifications.

13. Conclusion

Thank you for choosing the OptionsKit for iOS. With this guide, you’re now equipped to navigate the app and enhance your options trading strategies. Remember, practice and continual learning are key to success in options trading.

Happy trading!