Table of Contents
1. Setting Up Your Options Trading Environment
a. Enable Options Trading Permissions
Account Permissions
Log into your Tradovate account and verify that options on futures trading is enabled.
If not, contact support or request options permissions in your account settings.
Market Data Subscriptions
Ensure your data subscriptions include futures and options (CME, CBOT, NYMEX, etc.).
Some platforms consider options data a separate add-on.
Funding & Margin Requirements
Options on futures have margin rules different from equities.
Confirm your broker’s margin requirements and maintain sufficient account funding.
2. Customizing Charts & Workspace
Create a Workspace
Tradovate allows you to add multiple modules: Charts, DOM, Option Chain, etc.
Arrange them in a way that suits your workflow (e.g., left panel: Option Chain, center: Chart, right: DOM).
Underlying Futures Chart
Keep a real-time chart of the underlying futures (e.g., ES for E-mini S&P 500).
This helps you monitor market direction and volatility.
Option Chain Window
View strikes, expirations, bid/ask, volume, open interest, Greeks, etc.
Use it to quickly assess implied volatility (IV) levels and liquidity.
DOM or Order Entry
For fast entries, some traders use DOM. Others use a dedicated options ticket or chain.
Manage positions quickly and see market depth in real-time.
Optional: Chart the Option Itself
In Tradovate, you can open charts for specific option strikes to see historical pricing.
Liquidity can be low for certain strikes, so the price chart may be choppy.
3. Key Indicators for Options on Futures Traders
Implied Volatility (IV)
Why it matters: IV is a major factor in options pricing.
How to use: Look for changes in IV to decide if options are relatively expensive (high IV) or cheap (low IV).
Volume Profile / TPO (Market Profile)
Why it matters: Identifies key support/resistance based on high-volume areas.
How to use: Focus on value areas and volume nodes to plan strikes or anticipate price behavior.
Moving Averages (MA)
Why it matters: Reveals the overall trend of the underlying futures.
How to use: Use MAs to confirm bullish/bearish trends and choose appropriate option strategies (calls or puts, vertical spreads, etc.).
Bollinger Bands or Keltner Channels
Why it matters: Measures volatility around a moving average.
How to use: Expanding bands indicate increasing volatility (potential premium selling opportunity). Contracting bands indicate lower volatility (potential debit spread opportunity).
Oscillators (RSI, Stochastics, MACD)
Why it matters: Highlights overbought/oversold conditions.
How to use: Look for extreme readings or divergences to time reversals, potentially setting up short-term credit or debit spreads.
Volume & Open Interest (OI)
Why it matters: High volume/OI can pinpoint liquidity and potential price magnets near expiration.
How to use: Track daily changes in OI to see if large positions could influence market moves.
4. Adding Indicators in Tradovate
Open a Chart
Click the “+” in your workspace to add a new module and choose “Chart.”
Select the futures symbol (e.g., ES) or a specific option contract.
Add Indicators
Click the Indicators or Studies icon (usually top-right in the chart).
Select the desired indicator (MA, Bollinger Bands, MACD, etc.).
Adjust parameters (periods, colors, etc.) to your preference.
Save Template / Workspace
Once satisfied with your layout, save as a Chart Template or Workspace.
This ensures consistency for future sessions.
Option Chain & Greeks
Add the Option Chain module to display Delta, Gamma, Vega, Theta, IV, etc.
Right-click the column header to add or remove columns as needed.
5. Strategy-Specific Add-Ons or Tools
Spread Builder
If trading multi-leg strategies (verticals, iron condors, straddles, etc.), use Tradovate’s Strategy Builder or SHIFT-click in the option chain.
This simplifies setting up multi-leg trades.
Greeks Analysis
For advanced breakdowns, consider third-party tools (OptionNet Explorer, OptionVue) or Tradovate’s API for custom solutions.
Monitor total position Greeks (Delta, Vega, Theta) to manage risk effectively.
Advanced Volatility Charting
Tradovate’s native platform has limited volatility charting tools.
Integrate data from external sources or build custom solutions via the API to track historical and current IV trends.
6. Tips for “Indicators that Work”
No Single Holy Grail
Indicators are tools, not guarantees. A solid strategy combines market bias, volatility analysis, and risk management.
Use a Few Complementary Indicators
Too many overlapping indicators can cause confusion.
Example: A trend indicator (EMA) + a momentum indicator (RSI) + volume profile.
Focus on Volatility
Options prices hinge on implied volatility.
High IV often favors premium-selling strategies; low IV can favor debit spreads.
Practice in Demo
Test indicator-based strategies in Tradovate’s demo before trading live.
Gain confidence and refine your approach without risking real capital.
7. Putting It All Together
Create a Comprehensive Workspace
Left Panel: Option Chain (show Volume, OI, Greeks).
Center Panel: Main Futures Chart with Bollinger Bands, RSI, Volume Profile.
Right Panel: DOM or Order Ticket for swift executions.
Identify Opportunities
Watch IV for shifts (high vs. low).
Use your technical indicators for trend confirmation or reversal clues.
Choose option strategies accordingly (credit spreads, debit spreads, etc.).
Execute & Manage Trades
Use “Strategy Builder” for complex multi-leg trades.
Monitor Greeks in real-time; adjust or roll positions if the market moves against you.