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I’m just going to briefly go over the TOS platform, because I think it’s really important that you familiarize yourself with the platform, so that you’re not confused about where to go if you need information. Let’s go over the platform very quickly.
I’m using the Paper Money version of the platform, so that my current positions don’t get in the way of the tabs, and so that it doesn’t throw off what you’re trying to look at.
You can do paper trading through the TOS platform. When you sign on to the TOS platform, you can choose either the Paper Money, or you can choose the regular platform. They also now have an Invest Tools Paper Money option. I’m going to use the Paper Money, which is not a real account. This is a paper trading account that you can use to get started. It’s a really good idea for you to use a paper trading account, at least for 1 or 2 months, just to get used to the order entry.
That’s exactly what I did, when I first started using the TOS platform. I used it for a couple of months, just using fake money, here. You can put whatever amount of money you want into the account. It gives you an idea of how to create orders that get filled in the market, how to enter your orders, how to cancel your orders, and it also helps you get used to all the tabs that are here.
Now, when you open up the platform for the first time, you’re going to see the Monitor tab. The Monitor tab allows you to take a look at all of your current positions. This is your position statement. Since this is a paper trading account, I don’t use it anymore, and there are no positions in here. If you did have positions – I have this set up under Delta, so that I have all my Greeks here. My Delta, Gamma, Theta, and Vega. My profit and loss open for the entire position, for the day, profit and loss, and the buying effect on the position itself.
What you want to start out with, the very first time that you open this, you want to go to your Setup tab. If you want to display all of your accounts, you can display all of your accounts. If you just want to display one of your accounts, you can do that. Your default account, whichever one you want to. I have two paper trading accounts in here. One is called IRA, one is margin.
The main position layout, which was what I just showed you, the Delta, Gamma, Theta, Vega, the Greeks across the top. Or, you can go with Net Share, Net Change, Stock Price, etc. I like to watch the Greeks, of course.
Usually, the profit and loss layout is by open and day, but you can go open year-to-day. Open-day, percent-open, percent-day, percent-yield, year-to-day. I don’t really pay attention to most of these others. The default stock quantity order – you might want to change that to whatever you feel comfortable with. 100 shares, or 500 shares.
When you go to “Place an order” in your account, that’s the default stock order quantity that’s going to be pulled up, as soon as you enter an order. The stock order increments, so if you started out at 1,000 shares, and you wanted to toggle between different numbers of shares that you want to buy, you can set that at 100, or 500. If you set that at 500, your initial stock quantity amount would come up to 1,000. If you toggled up one tick from that, in your order entry system, it would go to 1500 shares, if you had it set at 500.
If you had this set at 100, it would toggle up to 1100 shares, as your default increment. For future orders, we don’t really use futures. Your option order… This is very critical. Your option order quantity increment, and your default option order quantity.
You want to start out – if I was just getting started, I would start out with maybe 2 contract, and option order quantity increment is 1. You could start out with 1 and 1, so if you brought up a stock order or an option order, you would have 1 contract on all of your order entries. If you toggled that up, then it would have an order quantity increment of 1 contract.
You would start out with 1. If you toggled it up, it would go to 2 contracts. If you toggled it up, it would go to 3 contracts. That’s the way I suggest you start out.
Show the expected price – you want single orders only. Show order confirmation? Yes. Clear order after send? Yes. You want quote speed – normally, you want either real time, no delay, or fast max, delay 1 second. I like real time, no delays.
That’s pretty much it. You can click “OK” on that. What I will do, is I’ll show you – we’ll go into our Trade tab, which is the very next tab. Like I said, in the Monitor tab up here, if you had positions, they would all show underneath here. If you go to your Trade tab – let’s say we put in the SPYs.
All of these little arrows, if they point to this – if you click on those, it brings up other options for you. Then you can click away, and you can click on any blank part of the screen. You can hide this underlying, or you can take a look at the current quote price. I like to keep that open.
If you open this, that’s pointing to the price, it opens up additional information that you can look at. You can open up a trade grid, which gives you the current bid and ask, from most of the major option exchanges. I don’t usually keep that open.
The Option tab – this will bring up all of the current available options for this underlying symbol. Let’s say we wanted to do something in May. We bring up the strike prices for May. You notice that I have quite a few of them open. I do like to keep a lot of them open.
The way to change that is right up in here. It says “Strike Quantity 50.” You can limit that to as many as you want. If you only want to have 5 strike prices open, you can do that. If you want to have 10 strike prices open, you can do that. It opens up a little bit further. I like to keep open – at least on the indexes – as many as possible. I tend to do a lot of “out of the money” stuff.
In the option tab itself, you take a look at all of these strike prices. All of the bluish-gray areas here, which would be from 138 down, these are on the call side. These are all calls. Anything in the black area, all the way up to your highest strike open, are “out of the money.” The grayish-blue ones are in the money, and the black ones are out of the money.
On the put side, which is over here on the right side, all of the grayish-blue ones are in the money, and all of the black ones are out of the money. You can see where the at the money options are, because they’re highlighted right where this line is. It’s about 138, and the current price is about $138.48, for the SPY.
If you’re doing something that is out of the money, then you’re going to be taking a look at – on the call side, you can be looking at any of these calls over here. If you’re looking to do something on the put side, and you want to do something out of the money, then you want to take a look at some of the options on this side.
For example, let’s say we wanted to set up an iron condor. We’re going to sell an iron condor. All we have to do is take a look at the strike that we would like to sell at, to initiate our iron condor at the call side, right click on that, and then that will bring up our order dialog box.
What we want to do, is we want to sell an iron condor. That will bring up the order entry box. It already has it filled in with the calls that we just had, because that’s where we put our cursor. We had it set up at 142, buying the 143. If you remember, an iron condor is an out of the money call, the sale of a call vertical spread, and the sale of an out of the money put vertical spread, on the same underlying index.