Many visitors to this site are interested in getting the basics of stock options explained clearly to them, perhaps for the first time. While options are too risky for many new investors, for those readers who have decided that using leverage with a small portion of their investment funds is appropriate for them, it seems fitting for me to cover trading tools like stock option software in what might turn out to be a series of stock option software reviews. As difficult as options trading is, you can find lots of help via free stock options software in automating the process of sifting through potential opportunities, accelerating the initial process of culling your best possibilities for successful trades from myriad combinations of strike prices, expiration dates and underlying stocks, based on criteria that you determine.
There’s a wide range of stock option trading software available, and while you certainly can spend a lot of money on a sophisticated software package there is also excellent options software that is available for free download. Be aware that sometimes companies will offer what sound like stock option ‘systems’ that in fact involve pricey advisory services, subscription-based memberships or managed option strategies. It might be best to use some free software (freeware) for a while to see if it meets your trading needs, because depending on your level of sophistication, it just might. This is not to say that these paid programs do not have value of course, but in your search for free stock option software be aware that you will run across many expensive offers as well.
I’ve written these stock option software reviews for reference to help you in your trading, and I expect to add to it over time. If you have discovered a tool that has helped you in your options trading please let us all know in the comments. By the way, I have no connection to any of the companies mentioned. These are unbiased reviews.
Option Edge is an outstanding piece of free stock option software that enables you to easily explore what-if strategies before you enter a trade, by typing the specifics of the position into an Excel spreadsheet format. The software can analyse more complex positions like spreads, etc. as it allows you to put in the particulars of each leg of your position then calculates outcomes for the entire position. This is a great time saver because instead of having to manually calculate your break-even point or maximum loss/gain for the trade, the process is automated for you.
In addition to the tabulated numbers, the software provides results in graph form, so that you’re presented with the entire range of outcomes in easy-to-understand picture. The format also shows stats like days till expiration, the Black-Scholes price, the Delta, dividend yield, volatility, functionality to graph options pain, the debit or credit at the position represents to your account, as well as the aforementioned max profit and max risk.
This software is so simple and intuitive that the documentation is only a few paragraphs! Did I mention it is free? Outstanding software, well-executed and a real time saver when you are comparing the relative merits of different positions you are considering entering or exiting.
The OptionsOracle options trading analysis tool from SamoaSky is another outstanding free piece of stock-option software.
You begin by building an theoretical options position and then testing it using myriad graphs and analytical tools to determine how much risk you would be undertaking and to precisely quantify the potential outcomes of any trade. All you have to do is type in the symbol for the underlying stock and the software will automatically download real-time data for the stock and its entire option table, i.e. all of the strike prices and expiration dates. The goal here, as with most option trading software is to fully understand the position you’re thinking about entering by attaching numbers to different potential outcomes. You can gauge the relative merits of different combinations of strike prices and expiration dates for a give stock option, or a position in the contracts of an entirely different underlying stock, before you enter trades.
The amazing thing about Options Oracle is that it provides users with other advanced tools, integrated right into the platform. As everyone has different needs, there may be no single best stock option software package but having said that I am astounded at how comprehensive this software is, and it’s free. Amazing value:
There is an options trading screener that you can use to check pre-configured strategies over many stocks at the same time.
For more advanced users there is a volatility analyzer, an options calculator, a “maximum option pain” graph and a so-called volatility smile graph.
The volatility analyzer is a calculator that shows you in graphic form the historical volatility for an option in comparison with the actual implied volatility over a given time period.
You can use the Greeks calculator to get quick looks at delta, gamma, theta, and vega data for an options contract of a given strike price and expiration date. Loads of information here, even for sophisticated options investors, and an enormous timesaver.
The volatility smile graph will show you the volatility smile for different options chains on different expiration dates, i.e. the change in volatility of a particular option depending on its distance from the at-the-money money option.
Additionally there is a portfolio manager at strategy analysis tools.
OptionsOracle automatically supports downloads of options-chain information from over a dozen options exchanges from around the world. Windows XP/Vista/7 platforms only.
The Visual Options Analyzer from Voptions is a sophisticated tool you can use to visualize in 3-D complex relationships between stock prices, expiration dates, and profit/loss scenarios built into any trade. The visualization capabilities here are valuable for getting a “feel” for every aspect of a trade through multicolored heat-map style 3-D chart that you can rotate and zoom in on as you do your analysis. With this stock option software you can easily calculate and graph options pain with 2-D charts that employ sliders to change parameters like the stock price, volatility, days until expiration, and interest rate, etc. One of the strong points of this software is that your data is all in front of you or just one click away; there’s a wealth of information presented in a very concise format. Just about all flavors of Windows are supported with minimal RAM requirements. Would definitely be a no-brainer for options trading if you are a TD Ameritrade customer as it is free if you are; $69 to non-customers.
You’ll find plenty of free stock option software reviews online, but in my opinion these are three of the best pieces of stock option software currently available. Please let me know if you have used option trading software that has helped you; I would be happy to add it to this list of reviews. Tools that help options traders quickly calculate potential pricing scenarios, look at implied volatility vs. historical volatility, graph options pain, etc., help increase your odds of profiting with these investments, and we can all use all the help we can get in this game. Once you have researched trading software, make sure you also read up in an effort to get options trading explained adequately to you.