The Interactive Brokers Option Wizard Tool serves as a bridge between market analysis and trading execution for the investor who has views on the market and is looking for option trading strategies that could be profitable if their forecasts are correct. The Option Wizard is available in Mobile, Client Portal, IBKR Desktop, GlobalTrader, and IMPACT.
The investor accesses the Option Wizard in the mobile device by tapping on the button showing and up and down arrow in the lower center of the screen and scrolling down to the Toolbox area. On the right-hand side underneath sell order is the Option Wizard button.
Tapping on the Option Wizard button takes the investor the Option Wizard Home screen where they first choose the underlying and then are brought to the Option Wizard home page where they can input their market forecasts by choosing whether the price will increase, decrease, stay within a price range, or move either up or down by a certain amount, or whether volatility will rise or fall.
The Option Wizard will identify suitable option strategies that align with the investor’s forecasts. The investor is interested in option strategies that would be suitable if Apple breaks out of a certain range.
One of the most valuable features of the Option Wizard is its educational component. On the initial screen is a link to learn more about price band strategies. Throughout the Option Wizard tool are links to educational materials as well as comprehensive analysis of each strategy generated. Even without using the tool to trade, investors can expand their knowledge of option combinations and how they may be used to profit from market movements.
The Option Wizard will prompt the investor for time range and other forecast specific items, in this case a range of movement of at least 4% to the downside or 5% to the upside.
Once the investor has completed entering all the forecast criteria the Option Wizard will generate suitable option strategies that align with the investors forecasts that can be filtered and refined using various criteria such as probability of profit, maximum potential gain, and aggressiveness.
The investor can then choose the strategy they are interested in, and a detailed Performance Profile chart will appear. The Performance Profile chart shows the maximum loss and gain as well as the breakeven point, or points. The graph allows the investor to visualize P&L through different price levels and the option Greeks throughout the expiration of the combination. The investor can continue to scroll down to access other data like the probability of profit, Greek values, margin impact, and other metrics.
When the investor is ready to submit the order, they slide the bar at the bottom of the screen.
The IBKR Option Wizard simplifies complex option trading by automatically generating strategies based on market forecasts, providing detailed risk analysis, and offering educational resources. The Option Wizard can help bridge the gap between novice and experienced traders through its intuitive interface and comprehensive strategy evaluation tools. For more information on the Option Wizard please view our Traders Academy lessons, “Trading Options Using the Option Wizard” and the web landing page.
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.
Join The Conversation
For specific platform feedback and suggestions, please submit it directly to our team using these instructions.
If you have an account-specific question or concern, please reach out to Client Services.
We encourage you to look through our FAQs before posting. Your question may already be covered!