Automate Options Trades on ThinkorSwim

Introduction

Today, we will be exploring how to automate options trades on the ThinkorSwim platform. This advanced feature allows you to create trades based on specific conditions, such as technical indicators or crossovers. We will start with a simple example of buying and selling a long call option when there is a bullish crossover on the MACD indicator.

To begin, you will need to open an option chain for the desired stock. In this example, we will use Apple. Select the expiration date and strike price that suits your trading strategy. Once you have chosen your options, click on the asking price to create an order ticket for buying the call option.

Now we can add the condition for our advanced trade. To do this, click on the gear icon on the right-hand side of the order ticket. A pop-up window will appear, and you can add the study condition based on the MACD crossover. Set the condition for the MACD line to cross above the signal line. You can also specify the timeframe for this condition to be satisfied, such as a daily chart.

Next, you need to specify the order type. You can choose either a limit order or a market order. If you are uncomfortable with market orders, you can set a limit order and link the price to the mark price at the time of the crossover. This ensures that you buy the option at the current market price.

After setting up the buy order, you can create a sell order to automatically exit the position when the MACD line crosses back below the signal line. This is done by creating a first trigger sequence. Right-click on the screen line and select "create opposite order" to generate the sell order. Adjust the study condition to indicate a bearish MACD crossover and set the order type to either a limit order or a market order, depending on your preference.

Once you have created both buy and sell orders, you can review and submit them. You can track these orders on the monitor page and make any necessary adjustments.

By using this automation feature on ThinkorSwim, you can execute options trades based on specific market conditions, saving you time and effort.

Keywords

ThinkorSwim, options trades, automate, advanced orders, MACD crossover, technical indicators, option chain, limit order, market order, first trigger sequence, monitor page

FAQ

Q: Can I automate trades based on other technical indicators? A: Yes, you can use a wide range of technical indicators and combinations to create custom conditions for automated trades on ThinkorSwim.

Q: Can I use this automation feature for other types of options strategies? A: Absolutely! Once you understand how to set up the conditions and orders, you can apply them to various options strategies, such as vertical spreads or butterflies.

Q: Can I adjust the timeframe for the study condition? A: Yes, you can choose the timeframe that best suits your trading strategy, whether it's a daily chart or a shorter timeframe like one minute or five minutes.

Q: Can I customize the conditions for the automated trade? A: Yes, you can set up conditions based on your preferred technical indicators, price levels, or any combination of factors that you find relevant for your trading strategy.

Q: Can I backtest my automated trades before executing them? A: Unfortunately, the ThinkorSwim platform does not have a built-in backtesting feature for automated trades. However, you can manually analyze historical data to assess the effectiveness of your strategy.