OptionStation Pro

Settings Panel

The Settings panel enables you to adjust the way you view and work with options, including:

• Common options attributes, including Volatility, Interest Rates, and Pricing Model;
• Risk Graph settings, including 2D graph plots;
• Option Chain display parameters; and
• Order account settings.

By default, the Settings panel is displayed in the upper right corner of OptionStation Pro. View the Working with Panels topic to learn how to move it.

Sections - The settings are grouped together into sections. The items in each section can be listed by clicking the down-arrows on the category title line to expand the list, or by clicking the up arrows to collapse the section.

Mini-Help - Highlighting any item (such as Hist Volatility Bars Back, above) in the Settings panel will display a brief description for that item in the bottom section of the panel. You can resize the panel and drag the horizontal dividing line up or down to increase the size of the description.

Common

The Common section lets you manage settings that apply to the source and calculation parameters for volatility.

• Hist Volatility Bars Back - Adjusts the number of closing prices used to calculate historic volatility (select between 20 - 250).
• Options Volatility Source - Contains a drop-down list that lets you select Implied volatility (IV) or IV Skew Approximation. Changing this setting affects the plot(s) of the Risk Graph before expiration and the Price Point values.
  • Implied (default) - Uses Implied Volatility as calculated from the current option price.
  • IV Skew Approximation - Uses an approximation technique to create a volatility curve that fits the current implied volatility values within a given expiration term.
• Interest Rate - Contains a drop-down list that lets you select a fixed or automatic rate and a text box to enter the percentage.
• Pricing Model - Contains a drop-down list that lets you select the Bjerksund-Stensland (default) or the Black-Scholes model for option pricing, sensitivity, and volatility calculations.
• Use Midpoint as Price - Check this box to use the midpoint price for volatility calculations, or leave it unchecked to use the natural prices.
• Max MRU Symbols - Adjusts the maximum number of Most Recently Used (MRU) symbols displayed in the symbol lookup (select between 0 - 40).

Graph

The Graph section allows you to define the view in your Risk Graph based on the parameters you select. This is a valuable tool in evaluating potential trades and testing how they would profit from market changes and time variables.

• Date Range - Controls the amount of time the graph that will have available to plot. Now - To Earliest Expiration is the default. However, you can select Now - To Latest Expiration or Custom.

  Changing the From date redefines what is considered the Now date in other controls. Likewise, changing the To date redefines the Exp date.

  The From and To dates display under the Date Range selected. To change the dates, you can either type in the dates (use MM/DD/YYYY), or use the calendar. Click the drop-down arrows next to a start and end date to display a calendar, and select the dates.

   The date at the top of the calendar shows today's date. The dates in the Settings panel are the From and To dates that you choose.

2D Graph Settings

The 2D Graph Settings is a sub-section of the Graph section that includes settings to control the number of plots and their appearance in the 2D Graph panel.

• Plots - Allows you to draw up to four plots representing four different dates between now and the date of expiration. Select Expiration + 1 day to display two plots (one plot will show today's risk curve and another the risk curve at expiration), Expiration + 2 days to display three plots, or Expiration + 3 days to display four plots. This gives you a graphical view of how time decay affects your position as each plot progresses. The number of plots you select will be reflected in the Analysis tab on the Risk Graph.
• Plot Slider Control - Each plot has its own slider control, allowing you to fine tune the date of each plot. You can move a plot incrementally with the slider control using the minus or plus buttons at each end of the slider. This allows you to see how much a position can change within a specified time frame. For example, you may show one third to expiration for one plot and two thirds to expiration for the second one, giving a graphical view of how time decay affects your position as each plot progresses. The color and date of the plots will show in the legend.
• Plot (n) Color - Each plot automatically uses a different color. Click on the Color control to choose your preferred color. Below is a Risk Graph. The dates for each plot and their colors correspond to the lines on the chart:

  

Option Chains

Specifies the settings for option chains.

• Expected Move Calculation - Aligns the expected move to fit closer to a standard deviation range. Select pessimistic for a longer range or optimistic for a shorter range.
  • Pessimistic - Provides an expected move based on the standard formula: stock price * implied volatility * √ (days to expiration/365).
  • Optimistic (default) - Modifies the pessimistic factor to provide a value that has been tested to be closer to a one standard deviation move (68% on a normal distribution curve).
• Price Updating - Specifies the frequency that prices and calculations are updated. Choices include:
  • Fast (default) - approximately every second.
  • Medium - approximately every 2 seconds.
  • Slow - approximately every 3 seconds.
• Decimal Places for Greeks - Specifies the number of decimal places for Greeks columns (2-4).
• Decimal Places for Probabilities - Specifies the number of decimal places for probability columns (2-4).