An complete professional guide on futures and options trading


It is a scenario-based algorithm which attempts to compute the maximum loss your account might reasonably incur within one trading day. The goal is twofold: You can find a lot more detail on the CME website. The CME and most other participating exchanges construct 16 scenarios, in which the prices of the individual markets are assumed to move up or down by varying amounts, while volatility is also assumed to go up or down. And what if you are holding positions in some closely-related contracts?

For example, maybe you are long an ES futures contract and short an NQ. Or perhaps you hold an iron condor spread on GC futures options. Or maybe you put on a CL futures calendar spread. Or maybe you wrote a naked put on EC currency futures far from the money. This is where it gets complicated. SPAN will try lots of different ways of grouping your holdings to compute charges and credits to your overall margin requirement.

So if you add a new contract that truly hedges your existing positions, it will reduce the amount of margin you are required to hold. Exchanges and their clearing organizations must ensure that every trader holds enough margin to cover potential losses. SPAN tries to achieve both of these goals. It consists of four individual contracts, and a naive risk system using quantity limits might charge you four times the margin of holding just one contract.

If you want more functionality and are willing to spend more time , you can also download the PC-SPAN app from CME and import parameter files for the exchanges you are trading. Using quotes currently in the market, its payoff diagram assuming no early exercise or assignment looks like this:.

How much should we expect to need in margin to hold this position? In this case, SPAN is over 20x more capital efficient compared to a naive quantity limits algorithm.

It can enable a trader to responsibly hold many contracts, provided they are properly hedged. The flat fee trading plan is variable, and the costs depend on the number of trades made in a calendar month.

The best value for your money here is definitely at the higher volume levels, but two separate trading plans along with reasonably competitive charges for low volume traders suggest that TradeStation is trying to appeal to everyone.

It takes some getting used to and there's a fairly steep learning curve, but the potential benefits can make the effort more than worthwhile. The only real downside of the platform is that beginners may struggle to get the most out of it. This is somewhat mitigated by the fact that TradeStation offers home study courses and online video courses that will teach you how to use the platform effectively.

This is called Option Station Pro and has a number of features that options traders will find very useful. The advanced order entry technology makes it easy to trade even complex strategies with ease, while the Spreadmaster position management tool allows for the simple creation of customizable spreads.

Orders are filled quickly and efficiently, and you have direct access to a wide range of exchanges. Direct routing is also available, allowing you to bypass the broker and trade directly with market makers. Other features include an excellent range of educational resources and an active community. You can learn a lot just from reading through all the discussions in the forum, and even more if you get involved yourself. Virtually everything is customizable and you can build customized strategies and tracking indicators that will help you to implement your trading ideas with ease.

The research and analysis features available are almost as impressive as the trading platform. You can extensively evaluate almost any equity you choose, with data provided from several leading sources in real time. There are also effective market scanning and pattern recognition tools for monitoring activity and finding trading opportunities.

The charting tools have an impressive depth of features and make technical analysis as straightforward as it can be. They come with over indicators as standard and you can create your own to enhance your analysis capabilities. With so much advanced software available, good customer service is essential. TradeStation doesn't disappoint in this respect, and they are quick to deal with any questions or concerns you may have.