OptionsPlay Explorer
Last updated
Last updated
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Integrated directly into the SharpCharts Workbench, StockChartsACP, Options Summary, and Options View, the OptionsPlay Explorer tool generates powerful options trading strategies and income-generating ideas for any underlying optionable stock.
A Profit & Loss (P&L) graph is shown for each strategy, allowing users to visually assess risk and reward. Trade metrics like max reward, max risk, probability of profit, and breakeven are provided for each strategy. Each strategy is explained in plain English, in order to make it more accessible for those new to options trading.
Each options trading strategy can be customized by changing the strike price, expiration date, type (call/put), action (buy/sell), or the number of contracts. Simulation tools allow users to simulate different market conditions by adjusting the target price, date, and implied volatility. Once you're ready to trade, the OptionsPlay Explorer will produce a summary of trade orders needed to execute the strategy, which can be copied into your brokerage account.
The OptionsPlay Explorer is part of the OptionsPlay Add-On subscription that members can purchase from the StockCharts Marketplace. Members who have not subscribed to the add-on can still see the OptionsPlay Explorer, but will only be able to analyze AAPL, not any other ticker symbol.
Learn More: OptionsPlay Add-On
The OptionsPlay Explorer is available in four areas within StockCharts:
To access the OptionsPlay Explorer from the SharpCharts Workbench, create a chart for the ticker symbol you want to assess. From there, open the Options panel below the chart and click the OptionsPlay button.
Note: the OptionsPlay Explorer is only available on the new SharpCharts Workbench, not on the Classic Workbench.
To access the OptionsPlay Explorer from ACP, create a chart for the ticker symbol you want to assess, then open the drawer at the bottom of ACP and click the Options tab. Once there, click the OptionsPlay button at the top of the drawer.
To access the OptionsPlay Explorer from Options Summary or Options View, load the options chain for the ticker symbol you want to assess, then click the "click here" link in the blue OptionsPlay banner above the options chain table.
When the OptionsPlay Explorer is opened, it automatically generates three optimal strategies for your selected stock, shown on the Trade tab of the tool. These strategies are based on the stock's current price action, trend, and implied volatility.
Bullish strategies are shown by default, but you can use the settings at the top of the tool to generate bearish or high implied volatility strategies instead.
For each strategy, a Profit and Loss (P&L) Graph is shown, which visually illustrates the potential outcomes of each strategy. The red and green areas represent potential loss and profit zones, making it easy to understand your risk/reward at a glance.
Below the graph is the expected profit and return for the strategy, as well as the OptionsPlay score for the strategy. The score ranges from 0 to 250, and is color-coded based on whether the strategy has an above-average (green), average (yellow), or less-favorable (red) risk/reward.
Click in the area below the P&L Graph to see more detailed metrics for each strategy:
Cost: The net debit or credit for the trade using current bid/ask quotes.
Max Reward: The maximum potential profit for the entire strategy.
Max Risk: The maximum potential loss for the strategy.
Probability of Profit (POP): The probability of the strategy being profitable at expiration, i.e., at least $0.01 in profit.
Breakeven: The price point where the strategy will start to make or lose money.
Days to Expiry: Number of days until the options contract expires.
Each strategy is also explained in simple, easy-to-understand terms on the Plain English tab at the bottom of the tool, removing the complexity often associated with options trading. For example, a Covered Call strategy would be described as: “If AAPL is above $175 at expiration, you will sell your shares at $175 and keep the premium collected.”
To adjust the strategy to better suit your trading preferences, click the Modify button next to that strategy. There are several parameters you can change for each leg of the strategy:
Strike Price: You can adjust the strike price up or down based on your outlook or risk appetite.
Expiration Date: Select an expiration that aligns with your trading horizon, from short-term opportunities to longer-term strategies.
Number of Contracts: Input how many contracts you want to trade based on your desired level of exposure or risk.
You can also add or delete legs from the strategy.
Once you are done customizing the strategy, click on one of the other tabs below the chart to close the modifications tab. The key metrics for that strategy will be updated to reflect any modifications you made.
To further analyze your strategy, the OptionsPlay Explorer offers several simulation tools to help you understand how the trade might perform under different market conditions.
This tool allows you to simulate various price points and dates to see how your trade would perform under different market scenarios.
Click the P&L Simulator tab at the bottom of the tool. You can change the target price, target date, and even volatility assumptions, and the P&L Simulator will re-calculate both dollar and percentage returns for each strategy.
You can adjust the implied volatility slider to forecast hypothetical profit or loss based on changes in volatility. This is especially useful when trading options on stocks with high or fluctuating volatility.
This tool helps you compare the number of shares you could buy versus how many options contracts you could trade based on your available capital. For example, if you have $10,000 available, the widget will calculate how many shares or options contracts you can trade and display the corresponding strategies.
Click the Risk and Investment Calculator tab at the bottom of the tool, then enter the amount you want to invest or risk. Click the Calculate button to update each strategy with the number of contracts that you could trade.
This simulator allows you to see the expected price range of the underlying stock based on its volatility. It visually represents the 1 and 2 standard deviation moves of the stock price, helping you gauge how likely it is for the stock to reach your target price.
Click the Trading Range Simulator tab at the bottom of the tool, then adjust the trading range using the slider buttons at the bottom of the range, or by typing the prices in the boxes at the top of the tab.
In addition to trading strategies, the OptionsPlay Explorer includes an Income Tab, specifically designed for income-generating strategies. When this tab is accessed, the OptionsPlay Explorer automatically generates two key strategies for your selected stock: a Covered Call and a Short Put strategy.
For traders who already own shares, the widget suggests the best Covered Call opportunities, complete with the optimal strike and expiration. Key metrics such as net credit, max reward, max risk, and the probability of the call expiring worthless are displayed, along with a clear P&L chart to visualize the strategy's potential performance.
To view the Covered Call strategy, toggle the "Own shares" setting at the top of the tool to "Yes", then enter the number of shares and the cost basic in the boxes to the right. The strategy will be adjusted to show how many contracts you can sell based on your position size.
For those looking to potentially acquire stock at a lower price, the Short Put strategy is also shown in the tool, along with similar metrics and visual aids. The strategy is explained in plain English, showing when it will profit and the total risk exposure.
To view the Short Put strategy, toggle the "Own shares" setting at the top of the tool to "No".
As with the trading strategies, these income-generating strategies are customizable. You can adjust the strike price, expiration date, and number of contracts to fit your income goals and risk tolerance. Simply click the Modify button next to the strategy to start customizing.
Whether you're focusing on trading strategies or income-generating strategies, you will be ready at some point to execute on the strategy and place a trade. The OptionsPlay Explorer makes it easy to copy all the trade information to your brokerage platform.
Once you’ve reviewed and customized the trade, and are comfortable with the potential risk/reward, click the Trade button within the widget.
This action populates a trade ticket with all the relevant details (symbol, strike price, expiration date, number of contracts) for you to copy into your brokerage platform for execution.
The OptionsPlay Add-On assists you through the entire process, from trade idea to trade execution. OptionsPlay provides hundreds of trade ideas in its read-only OptionsPlay ChartLists; the OptionsPlay Strategy Center to help you narrow it down to a few optimal trading ideas that really fit your trading style; and finally, the OptionsPlay Explorer to do a deep-dive into those best trading ideas, analyzing possible outcomes, refining your trading plan and getting ready to execute the trade.
Learn More: OptionsPlay Add-On
