Best Tool to Create Your Own Option Trading Strategies | Motilal Oswal

The Best Tool to Create Your Own Option Trading Strategies




The derivatives market is vastly different from the spot market. While you may have quite a bit of experience trading stocks in the cash and delivery segments, venturing into the derivatives segment and getting started with F & O trading is a whole different ball game. For many traders, not knowing how to go about executing futures or options trades can lead to significant losses.

While there are many trading strategies that you can employ to increase your profitability, it can get complicated if you’re looking at multi-layered strategies. Also, it may be difficult to create and execute customised options trading strategies all on your own.

Options Trading and Trading Indicators

Option trading strategies are what any trader who deals with the trading of futures and options looks for. Having said this, there are literally hundreds of indicators of a technical nature that can help to build great methods for options trading. Traders can use these and take advantage of the fact that they can be tailor-made to suit a trader’s certain style and the kind of asset to be traded in. Among traders of futures and options, technical indicators play a large role in determining the success of trades. You should also note that this article is written assuming some familiarity with futures and options trading, calculations, terminology and the awareness in general of technical indicators. Reputed brokerages like Motilal Oswal can help with tools that traders need to go forward with options trading. 

Options Trades - Key Things to Understand

Technical indicators, often made use of in short-term investment and trading, help traders to find out:

  • The price movement range in an options contract (how much has it moved?)
  • The movement direction (which way has it moved?)
  • The movement duration (how long has the move been for?)

As you may well know, options are prone to the decay of time, the period of holding the options contract means something. While a trader of stocks and shares is able to hold a security for an indefinite period, the trader in an options contract stands constrained due to the limited period defined according to the date of expiry of the options contract. Given this fact, indicators that are prone to identify oversold and overbought levels, like momentum indicators, are very popular with options traders. 

Besides momentum elements, there are other indicators that can be effectively used to trade in options. However, investors are often confused as to which to use for what. So, what’s the solution to this dilemma? Our options strategy builder tool is the answer you’re looking for.

1. The options strategy builder from Motilal Oswal

The strategy builder is an innovative tool that helps traders like you plan, build and execute multi-legged option strategies. The tool does this on the basis of spread. Additionally, the strategy builder also helps with real-time monitoring of strategies, so you can take action instantly if needed.

You can use the options strategy builder online on your computer or on your mobile. The feature is accessible through desktop EXE, MO trader web, and even through the mobile app with just a single click.

So, what makes the strategy builder from Motilal Oswal the best tool to create your own options trading strategies? The answer lies in the many features built into the online tool. Check out the many ways in which the strategy builder can be beneficial to you.

2. Customisation of multi-legged orders

With the options strategy builder, you can build customised and predefined option strategies. This is particularly useful if you’re engaging in multi-legged orders. The online tool helps you customise 2-leg, 3-leg and even 4-leg option strategies seamlessly.

3. One-click execution

The market waits for no one. And if you need to head to multiple screens to create and execute a trade, you may lose out on trading opportunities. With our strategy builder, you can rely on one-click execution of the desired spread with no manual intervention needed.

4. No cap on the combinations you can use

The customisation on Motilal Oswal’s options strategy builder is not limited to specific combinations alone. You can use predefined strategies or create your own strategies with combinations of both futures and options too, if that’s what you need.

5. Customisation at every level

Structuring an order means taking care of multiple aspects like the entry and exit points, as well as the stop loss. With the strategy builder, you can define the entry, the exit as well as the stop loss for each order.

6. Centralised and easy order tracking

The tool goes beyond merely helping you create customised strategies. It makes tracking easier as well, thanks to the smart strategy grid feature. With this, you can track the individual legs of a strategy and also the strategy as a whole.

Options Trading Strategies Used in Tools

With the MO option strategy builder, many traditional methods to trade in options may be used in an easy way for you to trade. Nonetheless, it’s a good idea to gain some knowledge of the common ways to deal with trading in futures and options. Here are some: 

  • RSI or Relative Strength Index - This is an indicator of momentum and is a metric that is used to compare the magnitude of recently achieved gains to recently felt losses, over a certain period. This is done to measure the change and the speed of a security in terms of the movements in its price. This way, oversold and overbought conditions can be determined. This strategy is perfect for dealing with options contracts in which underlying assets are stocks, relative to indexes.
  • Bollinger Bands - These measure the volatility of any options contract. As the volatility goes high, the bands are prone to expansion, and as the volatility decreases, the bands tend to contract. If prices move towards the upper bands, this means that the security is more overbought. In case prices shift in the direction of the lower bands, it means that securities may be oversold. 

Conclusion

With so many beneficial features, the strategy builder from Motilal Oswal is undoubtedly the best tool to create your own options trading strategies. If you’re looking for a way to streamline your options trading, check out this options strategy building tool today. A good way to be prepared for options trading is to familiarise yourself with different strategies so you can combine ready online tools with manual ways to get the best results.

 

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