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Trade Options Fast Using Active Trader on ThinkorSwim
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Dec 17, 2022
In this video we’re going to learn how to trade options using the active trader on ThinkorSwim. This video will walk you through opening an options chart, adding the active trader, and go through all the steps needed to actually place trades. I’ll also briefly touch on some of the advanced tools inside the active trader that could be helpful later down the line. These tools include creating order templates, utilizing auto send, saving order templates for future use. There are many examples throughout the video to get you comfortable using the active trader to trade options more quickly. We’re also going go through customizing the chart layout to make it conducive for options trading.
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0:00
In the video today, we're going to learn how to trade options using the ActiveTrader on Thinkorswim
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We're going to first start out by showing you how to actually pull up an option chart, add the ActiveTrader, and go through all the buttons to show you how you're actually going
0:10
to place trades on there. I'm also going to briefly touch on some of the advanced tools inside of the ActiveTrader that could really be helpful later down the line
0:17
After that, we're going to go through a few examples to make sure you're actually comfortable on how to use the tool and how it actually works. And then lastly, we're going to go through
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customizing the chart layout to make it conducive for option trading. Now, the reason for this
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customization is the fact that this tool is mainly geared towards actively trading stock and futures
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So making a few adjustments is going to increase the speed of your trades pretty considerably
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Now the very first step is actually pulling up an option chart. So if we wanted to look at an
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option chart, let's say for the Micron 17 September, and let's say we wanted to look at
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the $72.5 calls, we'll find it here. What we have to do is come on over here to the left-hand side
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where it shows the current price for that $72.5 call. It says it's currently trading for $197 by
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203. What we're going to do is go ahead and right click on it. We're going to come down here towards
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the bottom and you're going to see a little copy symbol and you're going to see a weird symbol next
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to it. It's like .mu210917. That's the actual option symbol. Now, technically we could have
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just typed this out in the little search box, but what we're going to do is just copy it. We're going
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to come back over to the chart page. We're going to click inside the black box and hit control V
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and enter. And now we are looking at a chart for that $72.5 call on Micron. Now, just like for
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stock or futures, if we wanted to open up the active trader ladder for the option contract
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all we'd have to do is come over to the right-hand side here and click on active trader. Now, once
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this active trader ladder opens up, we're going to have to widen out a little bit just so we can see
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a little bit more of a clear picture of that option contract. Now, that looks a lot better
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Now, this active trader ladder is tied to the $72.5 call right now. So anytime I click on any
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of these buttons up here, buy market, sell market, cancel, or if I use the prices down here below to
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place limit orders. Those are going to be for the option contract, specifically the $72.50 call
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for, I believe, September 17th. Now, just to do a quick rundown of how these buttons actually work
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let's go ahead and open up this menu first off by clicking on that little arrow. Now, before even
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diving into the buttons, let's look at this quantity box. If you see here right now, it says
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plus 10. That means anytime I click a button on the active trader, I'm going to be buying or selling
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10 contracts at a time. Now, if I only want to trade, let's say one contract at a time, we'll go
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and delete that out of there and put one. Now I'm starting off quite a bit smaller. And if I hit
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buy market or sell market, I'm going to be buying or selling one contract at a time. Now, some of
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these buttons are pretty much common sense. If I were to hit buy market right now, I'm going to be buying one contract of the $72.5 call at a market price. If I hit sell market, I'm going to be
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selling one contract at the market price. If I hit cancel, I'm going to cancel any working orders
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I have on the Micron $72.5 calls for the 17th of September. So it's not going to cancel all Micron
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orders, only those specific contracts. Now, if I hit reverse, I'm going to completely reverse my
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position, which almost makes no sense to ever use on an option contract. Remember, if you hit reverse
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and let's say you had five contracts of these $72.5 calls, if you hit reverse, you're going to be
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instantly short five contracts. Basically, you're going to sell those five contracts you currently
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hold at the market price. You're then going to sell another five contracts after that, all
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instantaneously, basically instantly reversing your position. So if I was short two contracts
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of these $72.50 calls and I hit reverse, I'd now be long two contracts. Now the next one up is
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actually one you might use and that's the flatten button. Now hitting flatten here is going to
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completely get you out of your position no matter what you held. So if I had 10 contracts to hit
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flatten, I'm back to zero. If I was short two contracts, if I hit flatten, I'm back to zero
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But always keep in mind that all these buttons up here are all market orders Reverse market order flatten market order So if I want to place limit orders I going to have to use these prices down below Now to place a limit order to buy all you have to do is come over to the left hand side the green column and you would just simply put your mouse to the left of the price
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you actually want to buy that contract for. So if we wanted to buy this contract for $1.90
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we would just put our mouse to the left hand side. If we clicked on that, it's going to bring up an order ticket to buy one micron, 17 September, $72.5 call for $1.90. Now, if I was to put it above the
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current price, you're going to see that it automatically changes to a buy stop below the
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current price by limit above the current price by stop. And that's because the act trader pretty
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much auto recognizes the type of order you should be using. And it does the exact same thing on the
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sell side. So if we're selling above the current price, that's going to be a limit order to sell
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If we're selling below the current price, that would be a stop order. Now coming back up here
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to the top for a second. If you see this template button right now, it says single. That means
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anytime you click a button on here, only one thing is happening. If I hit buy market, all I'm doing
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is buying a contract. If I were to come down here to the bottom and I would have put a buy limit at
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193, all I'm doing is putting in a buy order to buy one contract at $1.93. But with the Act Trader
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you have the ability to create very complex templates. So let's come up here to where it
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says single, and we're going to go to trigger with bracket for a second. Now, what this thing would
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allow you to do is basically put in an opening order, followed immediately by two closing orders
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one either for a profit ideally or to stop you out if it goes down so right now you can see up here
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the default is to buy one contract so for example if i was to put my mouse up here and click on buy
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market right now what i would be doing is putting in order to buy one contract at the market price
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basically it's going to fill instantly if the market is open so let's say i buy it and it fills
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at two dollars well what's going to immediately happen after that first order fills is an order
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is going to go out there one dollar above and one dollar below basically a limit order is going to
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go out there to sell it at $3 or stop myself out at $1, sell it for a $1 profit or stop myself out
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for a $1 loss. And all of that is done with one single click of the mouse, whether I'm placing
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limit orders down here below or using the buy market, sell market buttons up here at the top
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Now you can also create your own templates. Let's say you always wanted to sell it. Uh
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I don't know for a 5% profit. We can go ahead and change that to 5%. And you always wanted to
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stop yourself out at a 1% loss. Now what we can do is actually save that template. We're going to
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say plus 5% minus 1%. And once we save it, we can see that the template up here has been renamed
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And anytime we want to use this template, we can just click on this and our pre-made templates are
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right down here towards the bottom. Now we're not going to spend too much time on this. You can
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create as many templates as you want. You can even have different profit targets. That's what this
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trigger with two brackets or trigger with three brackets is for. Let's say you bought five contracts
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and you want to sell two of them for a 10% profit, you want to sell two of them for a 20% profit
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and then the remaining one you want to sell for 50% profit, that could be done with a trigger with three brackets
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all automatically with one single click. And that's why people are so drawn to the active trader
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because you can play such complex orders with a single click of the mouse and it really speeds up your trading
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Now, one of the last things I will say up here at the top is be very careful with this auto send button
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If you have this check marked, anytime you click on a button on here, buy market, sell market, or using the limit orders down here at the bottom. If you click
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it will instantly submit an order. No questions asked. If you saw before, if I don't have this
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check marked and I come down here at the bottom, I place this order, it's going to tell me what I'm
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about to do. I'm first going to place an order to buy the contract. I'm then going to try and stop
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myself out if it goes down too much or sell for a profit if it goes up, but I have to hit send one
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more time to actually submit this order. Now, if I was to have AutoSense selected and I went back to
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that bracket for a second if I was to click down here that order is instantly submitted You can see all three of those went out Now luckily the market is closed and this isn a paper money account so it doesn really matter but you can see how quickly you can place trades and if you not being careful you can get yourself into a lot
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of trouble having auto since selected is by far the fastest way to trade on here so be really
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careful with it do a lot of practicing before you actually jump into it in a real account now just
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so you see how the cancel button works if I come up here and hit cancel cancel all you can see all
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three orders were immediately canceled now that we've had a nice little rundown of how to actually
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use the active trader let's go through a few examples to make sure you're comfortable with it
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and i think we've spent enough time on the micron 72 and a half dollar call so let's bounce over to
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another stock let's go back to the trade page we're going to go ahead and pull up let's say
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microsoft here and this example let's say we wanted to trade the 315 call so we'll go ahead
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and find it we're going to copy it in this case we're going to go back over to the chart and we'll
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go ahead and paste it in here now we can see up here at the top we've got the microsoft 17 september
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315 calls. And again, this act trader is tied to that. So if we were to say we wanted to buy one
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contract at 118, we would just come down here to the green box, the left of 118, go ahead and click
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on it. And now we've got a limit order out there to buy one contract at $1.18. Now let's say in
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this example that it filled and we wanted to sell it. We would then come over here to the right hand
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column at $1.38. For some reason, we would just click on that little red box to sell it there
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and now we've got an order ticket to sell it at $1.38. Now let's go ahead and cancel out of that
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again and let's say this next one we wanted to pull up let's say Nvidia and we're going to trade
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the puts this time the 215 puts will come down here copy the symbol again come on over to charts
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hit ctrl v now in this example we don't want to just buy the contract we also want an order
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automatically to go out there to sell it for a 10 profit or stop us out at a 5 loss so what we're
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going to do is come on over here to template single. Go ahead and click on that. We're going
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to use our pre-made template just as an example. Now we said we wanted to sell it for a 10% profit
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So we'll go ahead and change that first one there. And we wanted to stop ourselves out at a 5% loss
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So we'll go ahead and change this one to negative five. And we're going to change these from just
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good to the day to good till canceled. Perfect. Next up, we want to put in the actual order to
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start this out. And we want to buy that contract if it ever goes down to $5.80. So go ahead and
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click on that green box there. And it was simple as that. We just put out three orders with one
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single click. And you can even see where a 10% profit and a 5% stop would be. It looks like a
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10% profit would be selling it at roughly $6.40. A $5 stop would be at $5.55. Now remember
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that's going to be based entirely off the fill price. So let's say the market pushes down in
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the morning, it opens at, let's say, $5.50. Well, then your limit order is going to go in
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lower than 640 and it's going to go in your stop is going to go in lower than 555. It's based off
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whatever your fill price actually is. Now next up we're going to go through actually how to customize
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this active trader to make it a little bit easier for you to trade options. I don't know if you
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noticed but this is kind of a pain. If I wanted to switch to the Apple 115 calls well I got to go
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all the way back to the trade page. I got to pull up Apple up here. I got to find the 150 calls that
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I just said I got to copy it got to come back here to the chart paste it in here and that's a whole
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lot of work and remember the whole purpose of this thing is to actually trade quicker so what we're
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going to go through is how to actually set this up a little bit maybe make it faster for you to
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trade with now to do that we're going to go over to the flexible grid and if you see right up here
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at the top I currently have a micron chart so this is the actual stock itself of micron but down here below I got two other charts opened up I got the Micron calls and I got the Micron puts Now this allows me to see the actual
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underlying stock itself while also seeing the calls and the puts. So I can trade both directions
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very, very quickly. Now, if you look up here at the top, I've also color coded them. You can see
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the top one has a red one. The next one up has a yellow two and the last one has a blue three
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now the reason I do that is to more quickly transfer between different symbols so let's say
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I wanted to very quickly go to apple and I wanted to trade the 150 calls the 150 puts so what I can
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do is come up here to the trade page I'm going to find apple and because this trade page is linked
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to red that means the chart the very top one is automatically going to be an apple chart now
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and what I'm going to do is find the 150 calls and 150 puts they're on the same line here
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and I'm going to right click on it and this time I'm going to say send to yellow and I'm going to
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right click on the put this time and also send to blue three now if I go back to the charts page
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which is the flexible grid we can see I've got apple the underlying stock up here at the top and
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I've got the 150 calls for apple in the lower left hand corner I've got the apple 150 puts down here
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in the right hand corner and you can also see I've got the active trader for each calls and the puts
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on the right-hand side. And you see that's a little bit quicker. Nothing's gonna be perfect
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but this send to option could save you a little bit of time and hopefully make your trades a little bit quicker
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Now, what you could also do if you want a little bit more space and you don't really care about the option chart over here
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for both the calls and the puts, you could click on the C over here on the right and just go to active traders down here at the bottom
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And then you can very clearly see that this is the 150 call right here and the 150 put on the right-hand side
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Now, just as a little rundown of how I did that, remember we are on the flexible grid right now you can see that's the second tab up here at the top
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under charts and if I wanted to start from the beginning let's go ahead and reset this just so
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you have an idea of how I did this you can see that this is the blank template this is what it's
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going to look like when you first come to the flexible grid and all I had to do is delete one
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of these and then I linked them up so I came up here I changed this one to red this one to yellow
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and this one to blue I added the active trader for each of these and let's say we wanted to get rid
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of the chart and then like I said before all we have to do is pull up the options that we want to
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trade so if we wanted to trade the Microsoft 320 calls and 320 puts we would just right click
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send to yellow in this case and send to blue in this case and we go back to the charts and we can
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see I've got Microsoft up here at the top and down here below I'm trading the Microsoft 320 calls
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and the Microsoft 320 puts on the right but nothing's going to be perfect hopefully this
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speeds up your trading at least a little bit. And I also know that this was incredibly confusing. I
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went through it very, very fast. I will be putting the chapters down below or the little timestamps
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So if you need to go back and rewatch it, I really recommend it. I don't personally use the
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active trader for my options trading, but that's because I'm not really day trading them. I don't
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really need to go in and out very, very quickly. But if you are, this could definitely be a very
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useful tool for you. Now, like always, if you guys have any questions at all, please leave them down
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below in the comments and I'll answer them all as best I can. And if you guys have any tips for me
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about how to customize this a little bit better for option trading, please let me know because I'm always happy to learn something new. But we'll go ahead and wrap the video up there. I hope you
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guys learned something. I hope you all make some money this week and I'll catch you all in the next video
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