Upbeat music plays throughout.
Narrator: Hello and welcome to this intro video on the thinkorswim® trading platform. This video will familiarize you with the platform so you can take advantage of your favorite features and functions of StreetSmart Edge® when using thinkorswim. Let's discuss the more advanced functions and compare that functionality with StreetSmart Edge.
Animation: thinkorswim home screen appears. Analyze, Scan, and MarketWatch tabs are each highlighted when mentioned.
Narrator: This session will cover how to analyze the risks and probabilities of trades with the Analyze tab, how to find trades using the Scan tab, and how to track the markets using the MarketWatch tab.
Let's start with analyzing the risks and probabilities of your option trades. Remember, there are multiple ways to access this functionality.
Animation: thinkorswim home screen appears.
Narrator: In this example, we'll utilize the Analyze tab. This tab can give you a visual representation of the profit, loss, and breakeven on most option trades.
For those of you familiar with the trade and probability calculator on StreetSmart Edge, much of that same information can be found in thinkorswim.
Animation: thinkorswim Trade tab.
Narrator: We can get there from the Trade tab by creating an order. Then, right clicking on the order and selecting Analyze, trade. Or, we can find the risk profile subtab under the Analyze tab. Once here, we can always add a simulated trade to see how this works. For this example, we can look at Apple. Then choose the expiration month, strike, in our simulated trade.
Let's buy a put. We can find the puts on the right-hand sidebar in the default setup of thinkorswim. But before we buy this put, I want to highlight some key customizable features on thinkorswim. Any time we see this lower right-hand triangle in the corner, it indicates that it's a customizable column.
Animation: Arrow hovers to lower right-hand triangle and opens the dropdown menu with customizable fields.
Narrator: We can filter our option chain window by clicking on the filter button just above the option chain. This might be helpful if we want to show just calls, puts or both. We can also customize the days to expiration and price. We can change the spread type of the option we're looking to buy by clicking Spread. And, lastly, we can customize the columns by selecting Layout and choosing a default preset or creating our own by selecting Customize.
Now let's get back to buying that put option. We can start with the Apple September 160 put. As we can see, the trade is populated below.
Animation: Arrow clicks on right side of option chain, clicks on a price, and the order entry bar appears at the bottom, which is then highlighted.
Narrator: Now we can click on the Risk Profile subtab to see a real-time risk analysis of that trade. We can simply slide the cursor across the graph to see the profit and loss of the trade at multiple price points.
Animation: Vertical line is adjusted across different price points on a risk profile.
Narrator: Let's take a minute to describe how to read it. The pink line is today's profit and loss. The blue line is the profit and loss at expiration. The price slices below the graph show how the trade performs at different price intervals. The default is up or down 10%. But,we can change these slices to a number of preset slices with a simple right click, then Set Slices. Let's change the price slices to seven steps at 5%.
Now let's move on to the Probability Analysis subtab.
Animation: Zooms in and out of the thinkorswim Probability Analysis page under Analyze tab.
Narrator: This shows the probability of a stock moving above or below a certain price by a certain date. It looks like the September Apple 160 put we are analyzing has about a 22% chance of settling below our strike price at the September 16 expiration. Remember, these probabilities are calculated using a theoretical pricing model and can change.
Now let's take a look at the Fundamentals subtab.
Animation: thinkorswim Fundamental subtab under Analyze tab.
Narrator: It has similar information to what we'd find on the research page in StreetSmart Edge. Let's take a look at automobiles under the Consumer Discretionary index. Why don't we select Ford.
As you can see, there are third-party ratings, a company profile, as well as fundamental data, all very similar to the StreetSmart Edge research page.
Now, let's look for tradable candidates by moving on to the Scan tab in thinkorswim.
Animation: Arrow clicks on and opens the thinkorswim Scan tab.
Narrator: The Scan tab allows us to screen for different stocks that meet certain criteria. Let's start with the Stock Hacker, to find and build a watchlist of stock candidates. Selecting Scan In will allow us to choose the pool of stocks to search, whether that's an index, exchange, or sector industry. Let's create a scan of the S&P 500®. As we can see, there are pre-populated scans already created but we can always edit those or add more later.
For our purpose today, let's look at a few stock, fundamental, and study filters. Some traders may choose to utilize these inputs, but your inputs may differ. We can search for dividend-paying, liquid stocks, with lower P/E multiples, trading above their 50-period simple moving averages. The dropdown menu will allow us to add similar information we'd find in the criteria tab in StreetSmart Edge.
For example, from the stock filter, we can filter based on multiple criteria. But for our purpose, let's look at last price, volume, and market cap. To do that, we'll click on the drop down and add those components, starting with the stock filter. We can choose last price between minimum 20 and maximum 200. Let's also add volume, minimum 1 million shares for liquidity. Finally, let's look for market caps with a minimum $500 million.
To further narrow our selections, we'll go ahead and add additional filters, starting with the fundamental filter. The fundamental filter will allow us to look for criteria such as dividend yield and price-to-earnings. Let's add those two. Now, let's choose fundamental filter.
We can start with dividend yield minimum 2% to maximum 5%. Let's also add price-to-earnings from 10 to 20. Finally, let's add a study filter for those technicians out there. We can look under Popular Studies and choose Moving Average Scan. We can then edit this to close 3% above the 50-period simple moving average.
To see our results, we'll select Scan. On the right, we can see how many stocks met that criteria. Don't forget to save as a watchlist if you like the results by using the dropdown on the far right.
Moving on to the Option Hacker.
Animation: Arrow points to and opens the thinkorswim Option Hacker under Scan tab.
Narrator: Let's use it to help us find a bullish call option candidate. The Option Hacker can help us find underlying stocks or ETFs with specific options criteria. For our purpose, let's scan in the S&P 500 like we did for the Stock Hacker. We can add stock, option, and study filters to help narrow our list. Let's start by utilizing some of those filters now. Let's click on the Add Filter drop down menu to show available filters.
We'll start with the Stock filter. Some traders may choose to utilize these inputs, but your inputs may differ. We can use last price between minimum 20 and maximum 200. Next, we can add some option filters. We may start with ask $0.50 to identify options trading more than $0.50. Then, we might choose days to expiration, minimum 20 days and maximum 60 days to cover the next two expiration months. Also, since more volume tends to lead to better liquidity, we may want to filter our volume with a minimum 200 contracts.
Finally, some traders prefer deltas in the 50 to 70 range for at-the-money to slightly in-the-money option candidates. We can also add a study filter to incorporate some technical analysis. Let's look for Popular Studies. Then choose Moving Average Scan.
We can edit the criteria to close 3% above the 50-period simple moving average to find stocks that may be just breaking above that level. Hit Scan and see what we find. We can now switch the column list from Option to Stock & Options to group our findings.
Now, let's switch to the MarketWatch tab to get a bird's eye view of the market movers, starting with the Visualize subtab.
Animation: thinkorswim Visualize subtab under MarketWatch tab, opening up the Heat Map.
Narrator: This tab provides a color-coded view of stock and sector performance. For those familiar with StreetSmart Edge, this is similar to the research tab, performance by sectors.
We can look at the indices view or break it down into sectors within those indices by clicking further within the dropdowns. Let's say we want to see how the biggest names in energy are performing today. A simple pan over the symbol will tell us the last price, percent change, and market cap.
As you probably guessed, the green color denotes positive change, and the red color is negative. Also, the larger the box, the greater the market cap.
Another nice function within the MarketWatch tab is the calendar. This is great for seeing upcoming dividends, earnings, and economic events. We can simply check the boxes on the left for the information we want to see in the calendar.
Now, let's move on to the Education tab to find helpful resources.
Animation: Arrow clicks and opens the thinkorswim Education tab.
Narrator: For more in-depth thinkorswim education go to the Education tab where you'll find plenty of investor and trading-related videos. We can also visit the Learning Center subtab to find more tutorials and other resources.
Finally, let's wrap things up with the Help tab. If we're experiencing issues, we can create a support request by clicking on the support chat icon near the top right of the main thinkorswim screen. In the chat window that pops up, we can click the Create Support Request button and begin typing in our request.
We've just scratched the surface to all the features on thinkorswim. To become more savvy, be sure to check out the resources and videos in the Education and Learning Centers.
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