Updated: Jun 1
Option strategy traders in India have one common problem that is lack of versatile trading platform such as "Think-or-swim" suitable for options trading. Many India based brokers don't even offer option chains. Interactive Brokers' Trader Workstation (TWS) is one the most advanced platform globally is available for option traders in India. I can show at least three solid features TWS platform that are a must for an option strategy trader. There are many more features are available in the platform. 1. Option Trader window: The window below combines option chain, strategy builder, order entry and a watchlist among other things. A trader can monitor the price movements of whole strategies instead working out the combo's price every time from individual options that make up the combination. Of course, I took the screen shot on a holiday, that's why price of strategies are not showing up in the quote panel. TWS is highly customizable. This enables traders to choose the columns in the quote panel, order panel etc. Order can be placed for the whole strategy with the help of algo order types. For example order type REL +LMT means that one of the leg will be filled at a relative price close to limit price and the other legs filled at a price so that overall strategy price stays with in the limit price entered by the trader.
2. Implied Volatility (IV) Viewer:
Volatility is one of the most important factor in options trading, in fact it is as important as the price direction if not more important. Implied volatility shows the trader how costly the option prices are currently. This is critical information for buy or sell decision. I have not come across any India based brokers offering this vital feature.
The window below presents strike-wise IV curve for each expiry. This is again customizable. Weekly, Monthly expiries, strike price range can be chosen to suit trader's requirement.
3. Option Strategy Scanner:
Scanners are very useful for beginners. Trader can define his/her views on the underlying and scanner will throw up different combos for different scenarios. For example if trader is of the view that prices will stay with in certain upper and lower range for next n number of days, he can input the parameters in the scanner which then provides a list of suitable strategies.
Traders can further help explore each strategy with pay-offs and break even prices with help of diagrams and standard deviation cones.
But what is the catch? Is it all goody goody with TWS platform. Below are the few pros and cons of trading with Interactive Brokers:
- High customizable, robust trading platform. I have not seen trading server hanging or disconnecting in the last four years
- API & other value added services such as Reuters Stock Plus reports are available free of cost
- Order execution is fast and algo order types help better entry price
- Customer service is quick and chat feature is available to talk to service / technical teams
- Margin requirements are higher than other discount brokerages
- TWS platform is advanced and traders need to go through a learning curve
- TWS is desktop based platform. IOS and Android apps are great too but web based platform is not up to the mark.
- IB only offers trading in NSE India.