ESP

    

TUTORIAL

INVESTING&BOLSA operates with the broker “Interactive Brokers”, It is one of the most important brokers on the world scene. As it is the one that INVESTING&BOLSA, works on, we are going to detail the steps to follow with the platform of the interactive broker which is the Trader Workstation (TWS).

 

There are several websites that explain step by step the process of opening an account, one of them is:

https://www.invirtiendopocoapoco.com/apertura-de-cuenta-en-interactive-brokers/

Once the account has been opened, we download the TWS platform and the next page is found:

 

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We go to OptionTrader, where the yellow arrow shows.

On the Option Trader page we see the following:

 

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Where the arrow indicates We put the ticker where the arrow shows, in this case VXX.

 

Once the VXX ticker is entered we see the different aspects:

 

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ON THE LEFT ARE THE CALLS AND ON THE RIGHT THE PUTS.

 

Arrow no.1 - Chain of options (includes all the characteristics).

Arrow no. 2 - Expiry of Options (MARCH 15 appears shaded and 29 DAYS LEFT TO EXPIRE)

Arrow no. 3 – EXERCISE OR STRIKE (If we see above, the VXX quotes 33.28 and expiries in this case go from 26 to 41; they have a bid (sale) and an ask (purchase) to a specific quote.

Arrow no. 4 - OPEN INTEREST (YIELD), options are interesting where there is liquidity and the real-life between purchase and sale should be the minimum possible.

Arrow no. 5 - DELTA, Delta of the option shows the movement of the option with respect to the underlying, that is, if the underlying VXX has a variation of 1 $ and the delta is 0.5, bonus will move to 0.5 $, half of the underlying (without considering time, volatility, etc., which also have an influence).

 

 

 

ORDER ENTRY, EXAMPLE:

PURCHASE PUT STRIKE 37 OPTION, EXPIRY MAR 15'19 AND WE ATTACH STOP AND PROFIT.

WHEN ENTERING THE ORDER, IT APPEARS “DAY” BY DEFAULT, AS VERTICAL ARROW SHOWS. WE CHANGE IT TO GTC, IT IS ALWAYS VALID AND ON THE RIGHT OF GTC WILL APPEAR LMT (LIMITED). WITH THE RIGHT BUTTON OF THE MOUSE, WE ATTACH BRACKET ORDER. IT IS AN ORDER WHERE WE ATTACH A STOP ORDER AND ANOTHER ONE OF BENEFIT OR LIMITED. WE WILL SEE ON NEXT IMAGE:

 

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ONCE THE ORDER IS ENTERED, AS SHOWN IN NEXT IMAGE, WE CAN SEE WHAT WE ARE GOING TO BUY:


- TICKER VXXB STRIKE 37 BUYS PUT QUOTE 4.7, WE ATTACH BRACKET ORDER, TARGET SALE 5.7 AND STOP 3.7.

AS WE BUY PUT OPTION, WE ARE INVESTING FOR UNDERLYING VXX IS GOING DOWN. IF THE UNDERLYING GOES DOWN, OPTION BONUS WILL RISE AND WE WILL REACH OBJECTIVE OR WE WILL USE METHOD.

ON THE OTHER HAND, IF UNDERLYING RISES, OPTION BONUS WILL GO DOWN AND WE WILL USE STOP, OR BECAUSE OUR METHOD IS TELLING US. ANYWAY OUR MAXIMUM LOSS WILL BE ALWAYS THE BONUS QUOTATION 4.7

 

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