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<\/p>\nWith an underlying symbol loaded in the Order Entry panel, locate and select from the dropdown menu to the upper right, the Strategy Builder. Upon opening you might notice that this looks identical to the Option Chain window. You are correct. The difference is simply that the Strategy Builder on\/off button is set to on. That means that by interacting with one or more options legs will not close down the window. Rather, by remaining open, you may add and subtract multiple legs to the Strategy builder area below, and when ready, create and submit orders for execution without leaving the open software. In addition, you can access multiple prebuilt strategies and easily select your desired strikes and expirations.<\/p>\n
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Adding Combinations<\/strong> – Let\u2019s start by populating the Strategy Builder area manually. First, select the desired expiration date using either the tabbed or list views. In this example I will build a vertical call spread. In order to populate the Strategy Builder area below, all I have to do is click the bid or ask price for each required strike. Remember, clicking the bid price will by default create an order to sell, while clicking the ask price will create an order to buy. So for this vertical call spread, or debit spread, I will click the ask price of an out-the-money call option and click the bid price of a higher strike call option. Both legs will migrate to the Strategy Builder area. Note that you can see where you clicked in the Option Chain area.<\/p>\n Each of the strikes is displayed as a separate line item and quoted. Note that the combined quote is also displayed along with the Greek values.<\/p>\n If you wish to view a combination in detail, use the Profile button to display a plot through expiration including Greek values. We\u2019ll cover this in more detail in another lesson). If you want to build and monitor multiple combinations, you can add it to the current Watchlist by clicking the Add to Watchlist button.<\/p>\n The Order Entry panel at the bottom of the page will update with the item you are building in the Strategy Builder area. Change your quantity, price, order type and time-in-force as required and use the Submit Order button to the lower right of the window to create an Order Confirmation before Transmitting your order.<\/p>\n Strategies<\/strong><\/p>\n Use the Clear All Legs button to start over, and we\u2019ll take a look at the commonly used predefined strategies available within the tool. Before starting, just ensure that you can see the legs you want to use in a combination displayed on the page. Click the dropdown arrow to the right of the Strategies button to reveal available combinations.<\/p>\n I will select the Vertical Spread. You will see an instruction on the screen. Hover your cursor above the bid value of the higher strike call you want to sell. By doing so, the software will highlight the opposing leg of the spread. Use the mouse wheel to widen and narrow the required spread.<\/p>\n When you are hovering above the appropriate strike prices to populate your combination, click on one of the legs to populate the Strategy Builder window. If satisfied, you may adjust price, quantity, order type and time-in-force as necessary before submitting the order.<\/p>\n Covered Call and Buy Writes<\/strong><\/p>\n One popular combination is a buy write or covered call, in which an investor buys stock and sells or writes a call option at a strike price above the current price of the underlying. The general aim is to receive the premium income through expiration of the option and perhaps use the strategy to exit the long stock position by having it called away upon expiration.<\/p>\n![\"\"](\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/01\/Strategy-Builder-2.jpg\")
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