Exotic Vertical Spreads In ThinkOrSwim

The recent installments in our ongoing series on EWP Vertical Spreads started off light with regular debit spreads and then introduced us to some of the more exotic option spread concoctions. This is the list of what’s covered in our series:

Chapter 1 — Bull Call Spread and Bear Put Spread – post 1 and post 2.
Chapter 2 — Bull Call Ladder and Bear Put Ladder – post 1 and post 2.
Chapter 3 — Ratio Call Spread and Ratio Put Spread – post 1.
Chapter 4 — Bear Call Ladder and Bull Put Ladder – post 1 and post 2 (this Friday).
Chapter 5 — Call Ratio Backspread and Put Ratio Backspread (still to come)

As you know we are currently in Chapter 4 and this coming Friday we will continue with a real world example of how to employ a bear call ladder. Last weekend some of you wondered how it was possible to construct some of these strategies, as not all of them are available from the right click panel in the TOS option chain. We all know that simple debit spreads are covered already – just click on ‘vertical’ in the drop down (see image below) – so that’s 1 out of 5. But how about all those others?

I have been pressing Tom Sosnoff and his hard working crew to give us some guidance and this is their response which they permitted me to post here on the blog:

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Please allow me to clarify your request. If you right click on any leg in the option chain, you will see the ability to create both Vertical and Back/Ratio spreads which covers 3/5:

To accomplish the final two you would need to use the CTRL key. You have the ability to create CUSTOM spreads by holding the CTRL button and selecting single legs. Please see the order ticket below…

You can see here that I have created the Bear Call Ladder custom spread by holding the CTRL key…

Step 1 – Hold down CTRL
Step 2 – Click on the BID of the ATM Call
Step 3 – Click on the ASK of the OTM Call
Step 4 – Click on the ASK of the further OTM Call
Step 5 – release the CTRL key

You can see that this is entered as a single order which seeks execution at a single limit price. This eliminates the risk of executing on only part of the spread as you mentioned. In this way it is possible for you and your users to create ANY strategy which consists of 4 legs or less. Please let me know if I have misunderstood your request in any way or you would like additional clarification. Also, let me us know if you have any suggestions on ways to optimize such a feature. Thanks in advance for your follow-up!

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Well, there you have it. And this is your chance to chime in and ask for any improvements if you see an opportunity. I will forward this URL to our friends at ThinkOrSwim who are welcome to address any questions or suggestions right here in the comment section.

Cheers,

Mole