Level playing fields mean better, cheaper tools for everyone.
When self-directed equity investing took off in the 1990s from the rise of online brokers, I observed a fast democratization of tools, one after the other. One day they were exclusively available via a $35,000 institutional trader platform; the next day, available for everyone, with prices to access often declining down to zero. To trade seriously at all used to require spending tons on a Silicon Graphics workstation. With the Internet revolution, all of that functionality moved "downstream'", became web-enabled, and often became freely accessible to retail investors on the web.
Right now I see the same thing happening on the options side. Tools, screeners, even complex order entry - formerly only available to institutional options traders - are now expanding to wider audiences. And once again, forward-thinking online brokerages are leading the charge.
TradeKing has worked hard to bring innovative, powerful tools to self-directed retail options traders, a group we think has been underserved up until this point. Our Options Scanner and Options Strategy Screener are web-based versions of previously professional-grade tools sold by our partner iVolatility to hedge fund managers and institutional options traders. We worked together to design a more thoughtful, easy-to-use interface and let them loose on the web, free of charge to our customers.
We worked with iVolatility on some brand-new tools that crunch reams of abstract options-data figures and transform them into an easily understandable, relevant look at the markets or your portfolio. I'm especially excited about our Profit + Loss Calculator and the Probability Calculator, both developed in close partnership with iVolatility and exclusive to TradeKing. (I've been threatening to walk through each of these cool tools in the blog, so maybe I can put that plan into action soon.)
Say you're planning a multi-leg strategy and want to assess your break-even points, but hate the idea of doing all that math. The Profit + Loss Calculator is your dream-come-true: you input your strategy leg by leg, and the calculator goes to work pinpointing your break-evens including all legs. It also summarizes all that data into a crisp, easy-to-follow line graph. You can even adjust underlying factors like volatility or days-to-expiration and watch how the data and graph change, dynamically.
The Probability Calculator is another beauty for its simplicity and power. It helps answer a question every trader wants to know more about: how likely is it that my strategy will pay off? Enter your symbol and target price(s) into the Calculator, and you'll find out the likelihood that your strategy will finish above, below or between those target prices. I now use both tools with every options trade I consider; it gives me a great perspective on what I'm dealing with, statistically speaking, before I decide whether to commit any capital. You can see where such tools make entering the options market for the first time less of a mysterious proposition, fueling trading volumes over time.
If you're curious, take a look at our video demos for all these tools from our Learning Center home page.
