Placing Option Orders (Multi-Leg)

The steps for placing a multi-leg option order vary depending on the strategy you are using, but following are the general steps with links to more details. When one or more of the strategies requires further explanation on a particular step, it is called out beneath the step.

1. In the Trade tool or Symbol Hub, click the Options tab.
2. Enter the underlying symbol in the Title Bar and press Enter on the keyboard or click Go.
3. Select the type of option trade you wish to place from the Strategy Selector. For more on the types of strategies you can trade from the Options tab, see Option Strategies Overview.
4. The Option Chain display at the bottom of the Options tab will display all the eligible pairings based on the strategy you have selected.
5. You can further filter the contracts or pairs displayed using the Option Chain Filters.
6. Click within the Bid column or Ask column to select the pair you would like to trade. The Midpoint is the difference between the bid price of the option being sold (bid) and the ask price of the option being bought (ask).

Buy-Write/Sell-Write: When opening a Buy/Write, select the price from the Ask (Buy Stock/Sell Call) side, and when closing (Unwind), select from the Bid (Sell Stock/Buy Call) side. The opposite is true for a Sell-Write. Click in the Bid (Short Stock/Sell Put) column to open a Sell/Write and the Ask (Buy Stock/Buy Put) column to Unwind.

Rollout: Select the option position to sell in the Position to Close drop-down, and then click the contract you want to roll forward to.

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).

Combo: You can either enter the legs of the trade in the order entry fields at the top of the trade ticket, or you can right-click on a contract in the option chain and select whether to Load it to Leg 1 or Leg 2.

7. Adjust the quantity using the arrow buttons or entering the quantity manually.

Keyboard shortcuts

• Up/Down keys increase or decrease by 5 contracts
• Left/Right keys decrease or increase in increments of 1
• Shift + Up/Down keys to increase or decrease by 10
• Shift + Left/Right keys to increase or decrease by 1
  
  

Buy-Write/Sell-Write: Theses strategies have a stock leg and an option leg, so when specifying quantity, stock will have a 100:1 ratio to contracts. Increasing the share quantity will increase contract quantity proportionately.

Ratio Spread: Quantities for the two legs of a ratio spread are required to be in a 2:1 ratio.

8. Set the Limit Price. Click the Net Credit, Debit, or Midpoint price in the Trade Ticket to use that price. You can also manually enter a different price or use the arrows to select a new price. Note that all multi-leg option orders are sent as Limit orders.

Keyboard shortcuts

• Up/Down keys increase or decrease by .05
• Left/Right keys to decrease or increase by .01
• Shift + Up/Down keys to increase or decrease by .005
• Shift + Left/Right keys to increase or decrease by .001
  
  

9. If applicable, select the Timing for the order.

Available Timing Choices*

• Day: Causes your order to be canceled at the end of the current day's trading if the order has not been executed. All Market Orders are automatically Day orders. Orders are generally considered to be day orders unless otherwise specified.
• GTC (Good 'Til Canceled): Instructs the broker to keep an order open until it is either executed or expires. At Schwab, GTC orders remain open for 60 calendar days unless filled or you request that it be canceled before that time.

10. Check the AON (All or None) if you want your order to fill ONLY if the entire quantity is available. Also, for Buy-Writes, you may choose to Reinvest Dividends on the stock leg of the trade.
11. Choose the action you wish to take with your order. Actions vary depending on the strategy.

Buy-Write/Sell-Write: The software will activate the appropriate action button for the type of order you've selected and disable the other button. Click Submit to Open or Submit to Close.

Collar, Vertical Spread, Calendar Spread: Click Submit to Open or Submit to Close.

Rollout: Click Submit Order.

Straddle: If you are placing a sell order, click Sell to Close or Sell to Open. If you are placing a buy order, click Buy to Open or Buy to Close.

Combo: Select the option contract for each leg of the order (only two legs per order). To send the order, click Submit Order.

12. Click Review Order (if you have not turned off order verification).
13. If the order settings are correct, click Place Order. To edit the order, click Edit Order. To start over completely, click Do Not Place.

Commissions, taxes, and transaction costs are not included in any of these strategy discussions, but can affect final outcome and should be considered. Please contact a tax advisor to discuss the tax implications of these strategies. Many of the strategies described herein require the use of a margin account. With long options, investors may lose 100% of funds invested. In-the-money long puts need to be closed out prior to expiration, since exercising them could create short stock positions.

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." Member SIPC