Placing an Advanced Options Order

TIP:  If you are learning about advanced options orders for the first time, please begin with the Trade Advanced Options topic. It will point you back to this topic when you are finished.

You will also want to review the different types of strategies available in the Advanced Options Overview topic.

 

Get a quick overview of Advanced Option Trading in StreetSmart.com™ in this Advanced Options training module.

 

Instructions for placing an advanced options order vary depending on whether you use the Strategy Filter or Combo to find pairings. Use Strategy Filter if you want to use one of the available strategies to identify options pairings. Use Combo if you already know which contracts you wish to pair in the order.

Strategy Filter

Combo

Stock and/or option symbols and price and volume data shown here are for illustrative purposes only. Charles Schwab & Co., its parent or affiliates, and/or its employees and/or directors may have positions in securities referenced herein, and may, as principal or agent, buy from or sell to clients.

  1. Enter a symbol in the Underlying field if using the Strategy Filters, or enter option symbols for Leg 1 and Leg 2 if using the Combo strategy.

  2. Click Get Spreads to display an initial list of paired contracts based on the default Strategy Variable.


    Combos     will only show pairings between the two options specified (or an equity and an option if an equity symbol is loaded into Leg 1). If you are placing a Combo order, you may skip to step 8 as combos do not have any additional variables to set up.

  3. Select a Strategy from the drop-down menu. There are several to choose from, each with their own risks and variables, so you should review the information about each, starting with the Advanced Options Overview, before placing trades. The Strategies available are based on your options approval level.
    The Strategy Variables and pairings available will automatically change when you select a different strategy.

  4. Select the specific expiration month or choose Near to display pairings for the current month, and the next available expiration month. For time spreads (Calendars or Rollouts) Leg 2’s expiration date will need to be later than Leg 1’s.
     

    Rollout

    Exp Leg 1 is the expiration month for the option position you wish to Close and Exp Leg 2 is the month for the position you wish to Open.

    Calendar Spread

    Exp Leg 1 is the near expiration month and Exp Leg 2 is the far expiration month.

  5. Contract Type is where you can specify whether to display Calls or Puts (applies to Rollout, Vertical Spread, and Calendar Spread orders only).

  6. Select the Strike Range, which will show you potential trades where the difference between the two contract prices is equivalent to the strike range you specify. (Applies to Rollout, Collar, and Calendar Spread orders.)
     

    Vertical Spread

    Select the Spread Range, which will show you potential spread trades where the range between the two contract strike prices is equivalent to the spread range you specify.  

  7. Select whether you want to view pairings whose strike prices are At the Money, In the Money, Out of the Money, or to see all strike prices at once, leave the default All Money.
     

    Collar / Straddle /  Strangle

    Select whether you want to view combinations that are Around the Money, Above the Money, Below the Money, or to see all at once, leave the default All Money.

  8. Now that all the variables are selected, click on the pairing for which you wish to place the order. This will load the legs into the order settings below.

    Note the Net column to determine whether the trade is a net debit or net credit type of pairing. Those with a 0.00 net are Even. If there are no price indications in this column, then one or both legs does not have a current quote at the exchange listed in the Exchange column to the right of Net.

    The Exchange column represents the price indication coming from the specified exchange displayed in the Net column. By selecting the drop-down menu in the header of the Exchange column you will see a list of all of the exchanges where the specified contracts trade. By selecting an exchange you might notice a price difference between the exchanges.

    Please Note:     The strategy prices are theoretical values based on the disseminated prices of the individual legs, and may not be available at the time the order is sent to the exchange.

  9. Select an Action, if applicable: Open to place a Sell to Open and Buy to Open; Close to place a Sell to Close and Buy to Close. (Applies to Vertical Spread and Calendar Spread orders.)

  10. Enter the number of contracts for the order in the Contract Qty field. This quantity represents the number of contracts representing each leg. For example: if placing a Buy Write order for XYZ you would enter 10 which represents 1000 shares of XYZ and 10 contracts of  XYZ calls. If 10 was entered for a Straddle you would be sending an order for 10 calls and 10 puts.

  11. The Type field will indicate whether you selected a Debit, Credit, or Even order type from the pairing results. You may change that selection in the type field if necessary.
     

    TIP:  The Net for a debit or credit consists of the ask price of the leg being bought and the bid price of the leg being sold. The net is the difference between debit of the purchased leg and the credit of the sold leg.

     

    Buy Write-Unwind /

    Sell Write-Unwind

    You will need to select the price indication from the Debit side, and when closing (Unwind), select from the Credit side. Note: In some cases a credit could be displayed for opening transactions and a debit for closing transactions.  

    Straddle

    The net is the total of the two bid prices of the options being sold (bid) or the total of the two ask prices of the options being bought (ask).

  12. Ensure that the Price at which you wish to send the order is correct. When you have selected a pair from the results it will default to the Net value of the Net you selected, but you may enter a different price or use the arrows to select a new price. Note that all Advanced Options orders are sent as Limit orders.

  13. Select the Time in Force (Day is currently the only TIF available)

  14. Enter the number of contracts you wish to trade. You may also check the AON (All or None), which will ensure that your order will only fill if the entire quantity is available for your order.
     

    Buy Write-Unwind /

    Sell Write-Unwind

    Remember the quantity represents 100 shares of the underlying stock, and 1 option contract. Adjusted contracts are not included.

  15. To send the order, click Verify Order or Place Order. If you have order verification enabled, a second window will open allowing you to review your order a final time before sending. Click Place Order when you have verified the order details.

 

Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Multiple leg options strategies will involve multiple commissions. Please read the Options Disclosure Document titled "Characteristics and Risks of Standardized Options" before considering any option transaction. Call your local Schwab office or write Charles Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA 94104 for a current copy. Member SIPC