TOS Conditional Orders

Discussion in 'Beginner Traders' started by Neil, Nov 2, 2017.

  1. Neil

    Neil Active Member

    Many new traders are overwhelmed by the numerous features found in the TOS software. I don't frequently use conditional orders because I'm usually around the house during market hours and I use Alerts liberally. But when I'm away from my computer or travelling I always try to set up Conditional Orders to protect myself from significant market movement. The subject has been discussed in a number of Capital Disc webinars but it takes me too much time to review them each time I want to create a Conditional Order. Since I don't use them regularly I created a cheat-sheet for myself and I thought I'd share it. Hopefully, this will be helpful to the community. Any comments that would help me improve this effort would be appreciated.

    Neil
     

    Attached Files:

    garyw, Ice101781 and Paul Demers like this.
  2. status1

    status1 Well-Known Member

    That is good for a single leg but most of us do either spreads BWB or condors
    I think a conditional order would be more helpful for these kind of trades but I imagine that would be a little more complicated
     
  3. Neil

    Neil Active Member

    Actually, the step-by-step procedure is exactly the same but the process of determining the trigger point can be a bit more complicated. Say you're in a complicated position, say a Road Trip Trade (or a Mango or an M3) that has been adjusted and you need to determine a price point at which another adjustment is needed. This can be accomplished using TOS tools to determine when overall position Delta will reach a certain level, or when Theta will go negative, or when the PnL of a position will reach your target profit or max loss. These are all situations that might occur in the future and you need to be able to ascertain the approximate price point in the market at which any of these events may occur. (These are also beyond my ability to demonstrate in a forum post - maybe a discussion in Trading Group 2 or a Round Table Discussion should be utilized.) In any case, here is an example showing an SPX broken-wing butterfly roll that should be executed when the market reaches a price point of 2600.
    Neil
     

    Attached Files:

  4. status1

    status1 Well-Known Member

    Thanks for the update
    I understand this is complicated

    So from what I understand the trigger point is the underlying and when it's triggered the butterfly trade will be executed at the market */- a few cents ?
    Would it be possible to specify a limit order instead of a market order at that point or that would no be possible ?
    I understand that it may not get filled I was just wondering if that is even a possibility ?
     
  5. Neil

    Neil Active Member

    In the butterfly trade example I set up a limit order trade to buy a butterfly linked to the mark of the butterfly and offset by +0.25; meaning when the market reached 2600, the order would be submitted (but not as a market order). TOS would determine the mark of the proposed trade at that exact moment, add 0.25 to the mark (I'm adding 0.25 because the order is to buy a butterfly), and then submit it as an order. I think that 's what you want the order to do, correct?
     
  6. status1

    status1 Well-Known Member

    Yes that's what I wanted
    I will use the paper trade account to practice and see where it gets filled and how much I have to add to the mark
    Thank you
     
  7. nybangali

    nybangali New Member

    Be very careful with this in live trading if you use Option price as trigger (vs underlying stock/index). This does not work as expected if you use Mark of the Option Prices - because TOS can claim at any point the bid ask spread had enough variability for a much higher Mark
    here is a real life recent example for me - I had sold 8 delta call spreads (RUT Dec 15 1580/1600) and had a GTC conditional order to buy back half of the spreads when the short call (.RUT171215C1580) reached 4.5 One fine morning right after market open (Oct 31 9:41am) they executed and closed out half of my spreads - even though the short (RUT Dec 15 1580) call had never even touched 4.
    When i called TOS their first response (& insisted for a while) was I entered order incorrectly. Thankfully there was sufficient information in the "Order and Strategy Book" section that proved my entry. After half an hour on hold they came back and declared their theory - at the time the order triggered the market had just opened and print on Bid was less than but the Ask was 7 something.. which hit the Mark of 4.5
    By the way - I have OptionNet explorer and I can't see the Mark for (RUT Dec 15 1580)exceeding 2.9 at any time during Oct 31 market open
     
  8. status1

    status1 Well-Known Member

    Good point
    These conditional orders are a tricky business that's why I stayed away from them
    I guess it's ok if you must get out at a certain point to avoid further losses but may not work as expected to fine tune or adjust a trade in certain circumstances
     

Share This Page

  1. This site uses cookies to help personalise content, tailor your experience and to keep you logged in if you register.
    By continuing to use this site, you are consenting to our use of cookies.
    Dismiss Notice