ThinkOrSwim - Contingent Order - Finger Pressing Money Key on Keyboard Ever wanted to buy an option when a stock got to a certain price level but weren’t sure what the price of the option would be? Me too, so instead I often use Contingent orders so that when a stock or ETF reaches a price level I specify, then the option order is triggered and I’m in the trade. This video goes over how to place this order in the Think or Swim platform and is a trade I’m looking to get in once my price target is met.

At StockOptionAssassin.com, we often use Contingent orders and One Cancels Other orders in our Marketing Timing Service to help our clients automate their option trades so they don’t have to watch the market all day.

Enjoy the video and contact us if you have any questions
about this technique.

Contingent Order Tutorial Video Transcription

Good afternoon. It’s Thursday, October 6^th, almost 3 p.m. I wanted to make a quick video for our subscribers on how to place a contingent order in the ThinkOrSwim platform to purchase an option. Sometimes you can do this with ETFs or stock, but not everyone knows how to do this with the option. I just wanted to show this.

So, the setup I’m looking for is here in VLO (Valero Energy). And I’m actually looking to get short here because it hit here and rallied back up. It’s coming in on the 61.8 retracement of this impulse leg down. It’s pretty bullish the last few days.

What I want to do is if Valero (VLO) gets to $21 (which is the 61.8 retracement), I want to buy a put. But I don’t want to buy a put until that happens and I don’t want to have to watch the computer all day when that happens either. So I’m going to automate this by placing a contingent order.

What I’m going to do is I’m going to go to the trade tab. I have VLO in here, I have the option chain up. I’m looking at the November 17 puts. When I buy the November 17 put, I want to actually place this at a market order because we don’t know what that price is going to be yet. It’s probably going to be a little bit less because as the market moves higher, the puts will be cheaper. We also want to make this a GTC (good till cancelled) because if this takes more than a day, then it may take two or three days before we get to that $21 mark.

For the contingent order, again, let’s just clarify this: We want to buy that put if and when VLO gets to $21. So we’re going to buy this November 17 put, market order, GTC. And we’re going to click this little cogwheel. And the cogwheel has our order in here. Let’s go ahead and buy ten of them. This is a small trade. These are some cheap options and we’re actually going to risk the entire thing on this one.

In here, you can set your parameters, your order conditions. IF symbol is VLO AND the MARK (which is pretty much between the BID and ASK) is at or above $21 THEN place this order. So this is the condition we are setting in order to buy that put. We need VLO to be at or above $21. We’re going to click OK, and now that is in there. You don’t see it right now, but you will in a minute. And this is a single order. So we’re going to confirm and send. Let’s go ahead and send.

We go to our order book down here. So, our working order: we see we’re going to buy ten VLO November 17 puts for a market order when the market VLO is at or above $21. So now, we’re just going to wait. If VLO starts to pull back here and doesn’t get to the $21 mark, then we’ll just simply cancel that order and look for the next setup. If it does hit $21, the ideal setup for it to hit $21 and then retrace, then our puts would increase in value and then we would start looking at a stop or a better target here.

So, that’s how you place a contingent order to purchase an option based on the underlying price of the stock or ETF that you are looking at. Hopefully this helps. If you have any questions, let us know. We’ll talk to you later. Thanks!