Option Trading Basics Explained - Options Tracker

Frequently Asked Questions (FAQ)

  • Q. What is OptionsTracker.net?
    OptionsTracker.net is an easy-to-use Option Strategies Management Tool that covers Options and Futures of Stocks, Currency
    and Commodities on popular exchanges in India; namely NSE and MCX.
    With this online tool, you can manage all your trades in one place, record new trades, measure your trading success, and strategise Entry and Exit points to maximise profits and minimise losses. The system can help you monitor near real-time data (with only a 15-minute lag) from multiple exchanges, seek out opportunities that you won't want to miss, and automatically send the details of trades you wish to execute to your designated Broker.
    OptionsTracker.net allows you to test, monitor and, if you choose, automate the execution of your trading strategies faster and more effectively than ever before.
    Here's are some of the things you can do with OptionsTracker.net!
    • Keep track of your NSE (Cash, F&O, Currency) and MCX Commodities trades 
    • Use near real-time exchange data (with only a 15-minute lag) to calculate your MTM P&L, Stop-loss and Targets
    • Calculate Greeks for all strike prices
    • Auto-calculate pay-offs for strategies such as Bull Spreads, Iron Condors, Strangles, and many more
    • Trade Volatility by comparing Implied and Historical Volatility values
    • Pull-in Options Trades data (Delta-neutral; meaning non-directional) based on events such as quarterly results and RBI monetary policies
    • Pull-in Pair Trades data based on our proprietary Algo Trading formulas.
    • Share trade results with your friends on Facebook
    • Interact with other traders in the OptionsTracker.net social media community to share knowledge, strategise trades, and discuss other Options trading related news.
  • Q. What OptionsTracker.net is NOT ?
    OptionsTracker.net is neither a Broker nor an Order Management System nor an online trading platform which can help you execute trades. We're broker neutral and the trades managed using our tool can be executed by your designated Broker or your other regular methods of trade execution.
  • Q. What methods of payment are accepted?
    You can pay using your credit card or via internet banking. You can also deposit a cash or cheque in our account, and upload a screenshot of the deposit slip to your account by visiting the Pricing page.
  • Q. How long ago was OptionsTracker.net launched?
    OptionsTracker.net was launched in November, 2013. Despite being in it's infancy stage, this digital Strategies Management Tool is by no means childish. It is a powerful, serious tool for beginner as well as seasoned traders. The tool itself has been carefully designed and built in consultation with experts in the field; professionals who are backed by years of market experience. Try out our power-packed tool free for 7 days, and you be the judge.
  • Q. Who owns and operates OptionsTracker.net?
    OptionsTracker.net is a wholly owned and managed proprietary tool / brand of Rhombus Technologies Pvt. Ltd. To learn more about Rhombus Technologies, visit www.rhombustechnologies.com.
  • Q. Can subscriptions be auto-renewed ?
    No. The auto-renew feature is generally disallowed by Indian payment gateways in order to prevent Vendors from storing customers' (your) credit card information. In order to extend your subscriptions, you'll need to manually renew each subscription once it expires by filling in your credit card details or via internet banking on the relevant payment gateway server. Even though this means more work for you, you can be assured that your critical financial information is safe and secure at all times.
  • Q. How does one use OptionsTracker.net ?
    1) Sign up to your OptionsTracker.net account.
    2) Add a new strategy (e.g. Nifty Long Call) or if you are unfamiliar with options, a regular ‘Long Future’ strategy.
    3) Proceed to the Open Positions page to view the near real-time impact on your P&L, the Greeks, etc.
    4) Square-off part of the trade to see how grouping works.
    5) View your Closed Positions to understand the success of your past trades.
    6) Pull-in data for Pair Trades and/or Options Trades to understand opportunities and initiate trading strategies.
    7) Configure your Broker's details so that information regarding new trades can be automatically e-mailed to them by the system, or proceed to execute the trades you have planned using any other existing online/offline system with which you are already comfortable.
    8) Once you get the hang of OptionsTracker.net, you can import your trades from ODIN or NOW OMS, thus reducing time and effort spent on manual strategy additions.
  • Q. Which exchanges are compatible with OptionsTracker.net ?
    Currently, we have tied-up with NSE (Cash, Futures & Options, Currency) and MCX (Commodities) exchanges, to pull-in their near real-time data (with a 5 to 15-minute time lag) for non-trading access on our website.
  • Q. Is the trade information displayed on the website, real-time ?
    MTM calculations are refreshed automatically every minute, with data downloaded from various exchanges. The speed of feed updates varies from exchange to exchange, and is approximately as given below:
    NSE (Cash, Futures & Options) : 15 minutes delay
    NSE (Currency) : 5 minutes delay
    MCX (Commodities) : 10 minutes delay
  • Q. How are the Strikes for various strategies selected by the tool ?
    OptionsTracker.net uses AI (Artificial Intelligence) to calculate the various Strikes that it displays when a strategy is selected. So, if a user choose the Strangle as a strategy for an underlying, it uses the IV (Implied Volatility) of that underlying to calculate the Safe Range, given the days to expiry, and populates the drop-downs for the various Positions. Of course, the user is given the flexibility and freedom to change this as per his or her preference.
  • Q. What is the default Lot chosen for a position ?
    By default, 1 Lot is selected for every strategy except Ratio Spread, where the Short Position is populated by 2 Lots of that underlying. Of course, the user is given the flexibility and freedom to change this as per his or her preference.
  • Q. What is the default expiry chosen for a position ?
    By default, current expiry is selected for every strategy except calendar spread, where one position is populated by the next month's expiry of that underlying. Ofcourse the user is given the flexibility and freedom to change this as per his or her preference.
  • Q. What does the P&L feature do ?
    P&L is a feature in which the you can enter your Portfolio Value (PV), Capital and Margin on a day-to-day basis. With this done, you can use the easy-to-use monthly/weekly grouping feature and charting to get a quick overview of the performance of your trades in the market. P&L is not calculated automatically by the trades entered into your OptionsTracker.net account as there are several scenarios in which different figures, than those available with your broker, will be visible. This can be quite confusing when planning trades, hence we have chosen to keep this system as an offline feature that is completely independent of the trades entered into your OptionsTracker.net account
  • Q. What does the Closed Position feature do ?
    The Closed Position feature keeps a track of your historical trading data. It tells you which strategies actually generated a profit or loss for you, and provides you with handy insight into your trading behaviour; which may come in handy when executing future trades. Usually ignored by most trading platforms, this can be a treasure trove of learning that enables you to improve the way you trade based on your own past experiences, which otherwise one tends to easily forget.
  • Q. How can the Payoff Chart help ?
    Payoff Chart will calcualate the grid of your Profit and Loss at various underlying prices. You can change the underlying / IV / Days to expiry to see how that will affect your P&L.
  • Q. How does the Volatility Payoff Chart work ?
    The Volatility Payoff Chart calculates the grid of your Profit and Loss at various underlying prices. You can change the underlying, IVs, and days to expiry to see how each affects your P&L.
  • Q. Can i change the price if my trade gets executed at a different price through the Broker ?
    Yes, you can change the price at which your trade got executed using both the 'Add Strategy' and 'Open Position' pages. But, you cannot change the MTM Price, which is auto-downloaded from the exchange, hence its possible that your MTM Profitability will not be 100% accurate. Also, it needs to be taken into consideration that the exchange feeds are merely near real-time with a 5 to 15-minute time lag. At the end of the day, these figures will most likely converge and match yours figures.
  • Q. How can i Square-off a trade ?
    To Square-off a trade, select a position by clicking the radio button next to it, and then click on Square-off. A pop-up will appear where you can enter a Reverse Position at the current market price and close the position. Once entered, you have to click on 'Send Trade to Broker' to execute the trade, or will have to execute the trade via your existing trading platform manually. If the Full Position has been squared-off, it will disappear from the strategy. If that was the only position in the strategy, then the strategy will be closed after which it can be viewed in the 'Closed Position' section. If some portion of a trade remains, only the net quantity will be shown. The Profit or Loss booked due to the square-off will be added in the Booked P&L column.
  • Q. How can i Roll-over a trade ?
    The Volatility Payoff Chart calculates the grid of your Profit and Loss at various underlying prices. You can change the underlying, IVs, and days to expiry to see how each affects your P&L.
  • Q. How can i properly utilise alerts for Stop-loss or Target?
    You can auto-calculate the Stop-loss and Target figures, by setting a pre-defined formula. So for example, if you do not wish to lose more than 5% on any trade, you can set the Stop-loss to 5%. OptionsTracker.net will calculate 5% of your Entry Price, and keep a Stop-loss accordingly. A good trader would at least consider a 1:2 Risk-Reward Ratio; I.e. if they are ready to lose 1, they expect at least 2 as their Target. In the above case, the Target will be a 10% rise over the Entry Price. You can change the Stop-loss and Target figures manually or if you do not wish to auto-calculate these, you can uncheck the option by editing your account information - 'My Account – Stop-loss Settings'. You can choose to send yourself, and/or your Broker, an e-mail when either of these levels, Stop-loss or Target, are reached for any of your trades. If you are tracking a scrip, and want to be intimated when it reaches a certain price, you can use this feature to do that without actually entering a trade. Just enter the Stop-loss figure, and click on 'Add Position' and it will recognise the command even though its not a genuine trade.
  • Q. What is Delta Neutral and how does it work ?
    Delta Neutral calculates the Net Negative or Positive Delta for all positions in the strategy, and allows you to add a Futures/Cash trade which, when added, will make the whole strategy Delta Neutral. You can also try a method called 'Gamma Scalping' which makes a strategy Delta Neutral multiple times. This in itself, is a deep strategy and is outside the scope of these FAQs, but it’s a way to make low-risk profit in situations where an underlying is volatile, but is range bound.
  • Q. How do i details of trades i want to execute to my Broker ?
    You can add multiple Brokers to your account, and choose to send the details of trades you wish to execute to any of these Brokers. An e-mail will be sent by the system on your behalf to the broker to execute the selected trades. If you're used to an online trading platform or perhaps placing the order over the phone, you can ignore this feature and continue using the method with which you are most comfortable.
  • Q. What features do i get access to with a General subscription ?
    With a General subscription, you will be able to use the following features on the website for the chosen exchange - Add Strategy, Open Position, Summary, Closed Position, P&L, and Import Trades. For individual pricing of other features, kindly visit the Pricing page.
  • Q. What features do i get access to with a Pair Trades subscription ?
    With a Pair Trades subscription, you will be able to get our system to generate Pair Trades suggestions for you. This is done using our proprietary Algo Trading software for the chosen exchange and period of subscription.
  • Q. What features do i get access to with a Options Trades subscription ?
    With a Options Trades subscription, you will be able to get our system to generate Options Trades suggestions for you. This is done using our proprietary Algo Trading software for the chosen exchange and period of subscription.
  • Q. What are Pair Trades ?
    Pair Trading is when you trade with one stock and, at the same time, short sell another correlated stock when both diverge away from each other more than normal, finally exiting the trade when the two stocks converge again. Pair trading, also known as Market Neutral, Spread Trading, Long/Short Investing, and Statistical Arbitrage, is a popular trading method amongst institutions, hedge funds and investment banks, as the professional behind these kind of organisations or groups understand the many advantages this technique deliver. OptionsTracker.net has developed a proprietary Algo Trading system, which scans the market for Pair Trade opportunities by doing the following:
    • Find a pair of stocks which are highly co-related i.e. they move in the same direction, at the same pace.  
    • Find their Historic Ratio and compare it to their Current Ratio to understand if there's an opportunity for any Mean-reversion i.e. stock prices catching-up with each other, or Divergence i.e. stock prices going further apart, thus breaking away from the historic co-relation
    • Scan opportunities for the right Entry and Exit Points, with proper Stop-loss and Target level alerts in place.
  • Q. What are Options Trades ?
    Option Pricing changes based on 3 factors:
    1) Underlying Value
    2) Time to Expiry and
    3) Implied Volatility (IV).
    There are periods when we can predict that the IVs of certain underlyings will rise for e.g. before quarterly results or RBI monetary policy or elections, and then there are times when the IVs suddenly drop for e.g. immediately after results. We use this information to trade options only for the rise and fall of their IVs. These is called Delta Neutral trading, which is also known as Non-directional Trading, wherein the rise and fall of the underlying value doesn’t have as big an impact on the strategy as it would have had in the case of a Directional Strategy.
    Generally, there are certain underlyings where the Historical Volatility is not as high as the IVs which means that the options are overpriced and should be sold. On the other hand, if the software finds that the recent HV is higher than the IVs being quoted, it's prudent to buy such options and hope that the Volatility continues and the IVs catch up, thus giving a quick profit opportunity.

    Scanning these opportunities requires lot of data, and a lot of calculations. Hence, this becomes extremely difficult to compute manually. OptionsTracker.net carries out these calculations for you using its extremely powerful server and huge databank. Example: In July 2013, one week before Infosys results, the Volatility of trades in Infosys stocks was 40%, and it rose to 90% one day before the quarterly report. On the day of the results, after the move had been made either higher or lower, the Volatility dropped to 25%.
  • Q. How do i import trades into OptionsTracker.net?
    If you use the MCX exchange or NOW (NSE’s trading software) platform (ask your broker for details of what platform they use for your trades) you can zip the 'Trade' folder found in the ODIN folder, and upload the zip file to your OptionsTracker.net profile. The system will unzip the file and scan the folder for all the data files, and upload it to your account. If you have already manually added some of the trades, these will be updated automatically so that there are no duplicate records. The trades will automatically be added to the relevant underlying strategy and if there are no open strategies for that underlying, a new one will be created.