Dynamically plot options theo price for active orders

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Hi, thanks for the great forum and videos. Very informative!

I am running an option strategy intraday and I have a stop loss on an option price to manage my risk. In order to improve my strategy and stop losses accuracy, I’d like to be able to find and plot (in TOS) on my underlying plot, the price at which I would be stopped given an option strike price.

For example, using SPX, let’s say I sell an option strike at 5 delta (put or call) for today’s expiration and I receive $1 for that. My stop loss would set  to exit the position and take a loss if the price of that option comes up to $4.

I saw your video about seeing the price of the underlying for a option price when entering an order. That gives an idea but I’d like to be able to have it dynamically plotted in my chart as the day progresses (and the greeks change).

What I’d like to be able to have is an overlay, on my SPX underlying chart, of the price at which I would be stopped so I can review resistance and support lines in relation to my stop (so for example I don’t put my stop right under a resistance and be stopped just to see the trend reverse).

This seems a bit complicated as it involves all the option greeks but I would think it is possible to approximate well enough.

Does this make sense? Any idea on how to implement this in thinkscript?

Thanks!

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Posted by (Questions: 1, Answers: 1)
Asked on April 11, 2020 11:55 am
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Please be sure to ALWAYS include a link to any resource you reference in your question. Otherwise all of us are left completely in the dark. We need the full context so be sure to include that.

So I am taking a guess the video you mentioned is named "Thinkorswim Options Trading Theo Price". If so, that video can be found here:

https://www.hahn-tech.com/thinkorswim-options-trading-theo-price/

If that is the video you mentioned then your answer is right there in the video itself. Go to the 5:57 time stamp on that video and you will see the order for that option is plotted on the chart, at the same value as the theo price for the option. This is automatic, but you may need to check your chart settings if you don't see it displayed as in the video.

This works the same for any active orders of single options contracts. Whether they are for entries or exits, including stop loss orders. It does not work for spreads.

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Posted by (Questions: 37, Answers: 4118)
Answered on April 11, 2020 12:28 pm
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Yes sorry about that. That’s the video I meant. Thanks for the answer. After watching the video again, it does show me the price of the underlying and shows the order on the underlying plot. However, it doesn’t entirely answer what I am trying to accomplish. This indication of the order underlying price is for the price at the exact time of entry only, if the price moves there right now it\’ll be triggered. What I’d like to see for my specific case, is that underlying price, that line, move up or down over time as the greeks of the specific option change during the day. I am interested in intraday on expiration day only so greeks like delta and theta change rapidly and so the equivalent underlying price will also change rapidly. In the video, that $0.80 is only for that time of entry if I understand this correctly. For my case, on expiration day, one hour later when price has moved and theta has chipped away at the option, this limit of $0.80 would probably never be reached if price has moved slowly or would have been reached for a much lower underlying price if delta has changed significantly. Said another way, as time passes, looking at a short call option for example, theta will push the price of the short option down towards zero but if underlying price rises closer and closer to my strike price, the delta will increase and then smaller and smaller changes in underlying price would move the option price closer and faster to my stop price. So what I’d like to see is a line on the chart that keeps going up and down as the greeks change so I can always keep an eye of the price at which my stop would be triggered, and without having to manually go check in the order book. Does this make sense? Thanks!
( at April 11, 2020 1:35 pm)
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It is dynamic and it does move up and down in real time as the stock price and options greeks are updated. Real time, live, dynamic. Just give it a try when markets are open.
( at April 11, 2020 2:07 pm)
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Good to know, I will test it on Monday!
( at April 11, 2020 3:35 pm)
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Is it possible to see it without having to place the order? Like with an alert for example?
( at April 11, 2020 3:45 pm)
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No. You can set a price alert for an option but if you want to see the current Theo price for that order you will have to right-click and select "Cancel/Replace order". Then you will see the Theo price just as you do when you place the order.
( at April 11, 2020 4:10 pm)
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