Using the Option Chain to Create and Modify Strategies
In the last chapter, we saw how in a few seconds we can create strategies that traders have trusted for decades. Now let’s see how you can customise these further.
In this chapter, we’ll understand how the option chain on Optionlogy works and how it can be used for customised strategies. If you’re not familiar with an option chain, here’s all you need to know about it.
What the Option Chain shows you
- Live data
Updated in real time market for all visible strikes - Futures and Equity
Some option strategies are based on equity. Through our option chain, you can navigate to the Futures and Equity tab and add them to your positions
- OI data, delta, and LTP (premium), IV
To make a sound analysis before buying or selling an option, you can see its implied volatility, the volume of open interest, its delta and its current premium.
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Bid-Ask Price
Under Depth, you can also see what that the last price that sellers are asking (Ask) and buyers were willing to pay (Bid) for a particular position. This can help immensely in trading as it provides a sanity check and the difference between Bid and Ask gives you an idea about the margin you can play with. -
Liquidity Indicator
The orange illiquidity sign appears for the strike prices that do not see any activity.
- Greeks
If you wish to see all the greeks of the options, you can add those to the option chain by switching to the Greeks tab.
The ATM option is highlighted in yellow, and ITM options are highlighted in blue, as you can see from the image above.
What you can do with Optionlogy’s Option Chain
- Understand market sentiment
Through OI or open interest, Depth (Bid-Ask price) and liquidity indicator, you can get an idea of the market sentiment before selecting a call or a put to trade in. - Creating Equity Based Strategies
Some strategies just require equity. In ordinary option chain, you can rule these strategies out, since you do not get the choice to add equity in your strategy. With Optionlogy, no strategy is beyond your reach. - Identifying Potential Trades and Market Opportunities
The Bid Ask price helps you identify gaps where you can play with the premiums and make more profits. - Make Smarter Trades
Not only do you get live data, but you can also view the greeks of each option to make more informed trades.
In the next chapter, we will take a deep dive into a special feature of the strategy builder, the Strategy Controls, that will make your trades infinitely more profitable.