The Interactive Brokers (IBKR) OptionTrader is a robust tool on the Trader Workstation (TWS) that allows the investor to trade single and multi-leg options. The OptionTrader allows the investor to load multiple option chains by adding additional tabs and offers the investor several data points and uses including the ability to:
- Display implied volatility by contract,
- Calculate fair value of options contracts
- View the options Greeks, and
- See open interest.
How to access OptionTrader in Classic TWS?
To access the Interactive Brokers (IBKR) OptionTrader in Classic TWS, the investor clicks on Trading Tools in the top left corner of the screen, scroll down to the Option/Events section, and click on OptionTrader.
The investor may also add the OptionTrader button to the toolbar by clicking on Configure, scrolling to Add More Buttons, and selecting the OptionTrader button. Once added, the investor can click on the OptionTrader button to access the tool.
How to access OptionTrader in Mosaic?
To access the Interactive Brokers (IBKR) OptionTrader in Mosaic, the investor clicks on the New Window button, scrolls down to the Option Tools area, and clicks on OptionTrader and a new window with the OptionTrader will appear.
What are the different areas of the IBKR OptionTrader?
The IBKR OptionTrader consists of a tool bar, toggle set, and five panels:
- The Quote panel,
- The Statistics panel,
- The Buttons panel,
- The Trading panel, and
- The Option Chain.
As is the case with most of the TWS tools, the OptionTrader settings in each panel can be configured by the investor to define columns, buttons, hotkeys, order presets, and other items.
What is on the OptionTrader toolbar?
At the top of the OptionTrader is the toolbar. Using the tool bar an investor can easily and quickly
- Add additional tabs to run multiple Option Chains,
- Cancel all orders on a tab,
- Clear the log,
- Show the option pricing in volatility terms,
- Bring up the TWS Combo Trader by clicking on the Option Spreads,
- Bring up Risk Navigator, Option Analytics, or the Model Navigator by clicking on Analytics,
- Go to the IBKR Trader Insight commentary, and
- Configure the OptionTrader.
Where are the TWS OptionTrader toggle buttons located?
The toggle set is in the upper right-hand corner of the IBKR TWS Option Trader. Each toggle allows the investor to display or hide features. Click “T” for the tool bar, “B” for the Buttons panel, and “S” for the Statistics panel.
What does the TWS OptionTrader Quote panel display?
The TWS OptionTrader Quote panel displays the underlying asset. Like many items in the Interactive Brokers’ Trader Workstation, the investor can edit the data columns by clicking on the Configure icon in the top right-hand corner of the panel.
An investor can create orders in the underlying from the Quote panel, clicking on the bid creates a sell order and clicking on the offer creates a buy order. Once created, the orders will be displayed in the Orders tab of the Trading panel.
What is displayed in the TWS OptionTrader Statistics panel?
Directly below the Quote panel is the Statistics panel. The Statistics panel shows relevant option related data such as option volume, put/call volume, option volume change percentage, historical volatility information, and implied volatility information. The data columns can be edited by clicking on the Configure icon in the upper right-hand corner of the panel.
How to add custom action buttons to the TWS OptionTrader?
An investor can add action buttons to the IBKR OptionTrader that allow them to quickly create orders, bring up another Trader Workstation tool, or cancel orders. To create new buttons or edit existing ones, the investor should click the Edit icon in the top right-hand side of the panel. Once the configure area appears, the investor can:
- Create a new button,
- Edit an existing one,
- Remove an existing one,
- Change the location of a button, or
- Duplicate a button.
Certain buttons can be armed for instantaneous transmission and will be identified by an asterisk next to the button name when armed.
What are the tabs in the OptionTrader Trading panel?
Continuing downward on the OptionTrader is the Trading panel, which consist of five tabs:
- The Order tab displays open stock and option orders created in the OptionTrader for the underlying.
- The Activity Log tab displays actions taken on the OptionTrader such as buys, sells, and cancels.
- The Trades tab displays completed trades that originated from the OptionTrader.
- The Portfolio tab displays the entire stock and option position for the underlying in the OptionTrader.
- The Strategy Builder tab which allows the investor to create multi-leg complex spread orders without leaving the OptionTrader.
An investor can choose a strategy from the drop-down menu and begin selecting strikes. Once selected, the investor can change the ratio, expiration, strike, add a stock order, and make delta neutral if they choose to. When ready to send the order, they click Transmit.
The investor can click on the Configure icon in the upper right-hand corner to add and remove the data columns in the Order, Trade, Portfolio, and Strategy Builder tabs.
For more information on the IBKR Options Strategy Builder, please see the lesson in Traders Academy.
How to use the IBKR Option Chain in OptionTrader?
The OptionTrader Option Chain will automatically populate with the strikes of the underlying selected. The investor can choose between a list or tabbed view. In list view mode, the investor can scroll downward to see each expiration, while tab view will show one expiration per tab. To change the expirations shown, the investor clicks on more and chooses an expiration. That expiration will be shown along with the two previous ones and the following one.
The Option Chain can be adjusted to show either calls & puts, just calls, or just puts as well as the number of strikes to display, exchange, and trading class.
The Load My Chains feature is unique to the OptionTrader Option Chain and when clicked, it will bring up the option chains for existing option positions in the underlying in the investor’s portfolio.
How is an option order submitted in the TWS OptionTrader?
To create an option order in the IBKR OptionTrader, the investor selects the expiration and hovers the mouse over either the Bid or Ask in the strike they are interested in. Notice that the background turns blue when the mouse is hovered over the Ask indicating a Buy and if hovered over the Bid the background turns red indicating a Sell.
To create an order, the investor should click on the appropriate side and the Order tab will populate. The size, Time in Force, Order Type, and price can be adjusted. When the investor is ready to send the order, they click on the “T” button in the status column. An order confirmation box will appear, and they can click Transmit.
The Interactive Brokers (IBKR) OptionTrader provides the investor with important data and tools useful when trading options. The OptionTrader allows for multiple tabs to be open at the same time so that the investor can monitor several different option chains.
Disclosure: Interactive Brokers
The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers, its affiliates, or its employees.
Disclosure: Multiple Leg Strategies
Multiple leg strategies, including spreads and straddles, will incur multiple commission charges.
Disclosure: Options Trading
Options involve risk and are not suitable for all investors. Multiple leg strategies, including spreads, will incur multiple commission charges. For more information read the “Characteristics and Risks of Standardized Options” also known as the options disclosure document (ODD) or visit ibkr.com/occ