Two brokerage accounts (there is no minimum funding required
to open either account)
1. For underlying stock RESEARCH — Use TD Ameritrade
….Underlying stock information is extensive and easy to use – $0 Commissions
2. To OPEN and CLOSE Spread Orders – Use TastyWorks trading platform
….Specializes in options and option information is extensive
TDAmeritrade has a Paper Money feature to test strategies.
TastyWorks does not have a Paper Money feature
WHERE DO I START?
There are stacks of books, seminars and dart boards on choosing an underlying stock. The best tip?
NO TIP !
You have decided on an underlying stock that you feel
confident will increase in value.
Do RESEARCH for underlying stock on TDAmeritrade trading platform:
GENERAL MOTORS (GM) STOCK CHART :
- Log In to TDAmeritrade
2. Enter stock symbol in “Symbol lookup” (upper right)
3. Click on “Company Profile”
4. Click on “News”
5. Click on “Charts”
(TDAmeritrade Stock Chart)
6. “Bid and Ask” is the difference between the bid(sell) price
that someone will pay, and the ask(buy) price someone
is willing to sell an underlying stock. The thinner the
difference, the cheaper to open the trade. Example: Bid …. Ask
35.05 …. 35.08 = 3 cents difference.
7. “B/A Size” represents the amount of all stock that is
available to immediately buy or sell at a
specified price. Example: 300 x 2300 means there
are 300 shares to sell and 2300 shares to buy.
Fill out each blank of the following template for guidance in
selecting an underlying stock and Bull Call Spread options:
STEP-BY-STEP ANALYSIS TEMPLATE
DEBIT Spread: Bull Call Spread – a/k/a: Debit Call Spread 0r — Long Call Vertical
WANT STOCK TO GO UP
Fill out this Worksheet from information on General Motor’s Stock Chart.
Date:___________ Stock Price $______
Name of Stock:__________Symbol:___ Print chart:___
Any important news about stock?_____
STOCK CHART: Need Hi/Lo “zig-zag”:___
Stock price today: Low:$______ High:$_____
Bid ….. Ask: $______ $_______ -want difference to be low (liquidity)
B/A Size: _______/________ – want a large difference
General Motors Option Chain:
Fill Out This Worksheet from Information on General Motor’s Option chain
Question #1: How do you calculate a option’s Volume and Open Interest?
A.___Multiply the premium by 100
B.___Both shown on Option Chain
C.___Subtract the strike prices from each other
D.___Call a broker
If Bid/Ask is: 35.05 and 35.08
What is spread of the above Bid/Ask Spread:
A. ___ $300
Question #3: If B/A Size is 300 X 2300, there are:
A.___there are 2300 shares to buy
B.___there are 2300 shares to sell
C.___there are 2600 shares to buy
D.___there are 300 shares unaccounted for.
Question #4: Open Interest is:
A.___the time the Market opens.
B.___the number of contracts exchanged
C.___the number of contracts that exist
D.___the transparency of the option market
Answers: #1: B — #2: B — #3: A –#4: C
OPEN and CLOSE ORDERS on TASTYWORKS trading platform
TASTYWORKS HAS 3 TRADING PLATFORMS:
1. Desktop (Windows device)
2. Web Browser (ios Device) (I-pad)
3. Mobile App (Cell phone) (Apple app Store, or
(Google Play Store)
1. DESKTOP – TastyWorks main trading platform –
A stand alone Windows device application. It
can be downloaded by going to TastyWorks site
Click on “Technology” tab (The trading platform
will have a black screen.)
2. WEB BROWSER – TastyWorks web browser trading platform –
accessed by using a web browser (i.e.Google)
This platform can be used as your backup
if you are working away from your Desktop.
3. MOBILE APP – TastyWorks Mobile App trading platform –
Those of you on-the-go can visit
Tastyworks on your Android (Play Store)
or iOS (Apple Store) to download.
How to Navigate WEB BROWSER Trading Platform:
A. Click on “Trading Platform”
B. Insert Stock symbol – Enter
C. Click on “Strategies” (drop down)–
D. Choose “Vertical” and “Long Call Vertical” – GO
E. Click on “Table” (option chain comes up)
F. Choose Expiration Date
G. Strategy confirmation (upper right)
DO YOUR RESEARCH !