This post shows how to place an OCO Order in the Think or Swim platform. An OCO order stands for One Cancels Other. OCO orders are a great trading technique for people looking to capture profit and be protected at the same time.
The basics of an OCO order is that you purchase an option, stock, or ETF and you place a stop order and limit order forming a bracket around your position. Whichever side of the bracket gets hit first will close your trade and cancel the other order. This is a great technique for night time traders who want to place an order for the following morning and then have a stop and limit order placed at the same time automatically.
In this video, I go over how to place the OCO order at the same time as the purchase of an option. If you have any questions about how to place an OCO order, please comment on the post.
ThinkOrSwim OCO Order Tutorial – Video Transcription:
Hello. This video is going to cover how to place an OCO bracket order on an option trade. And I’m going to show you how to place this order based on a percentage of the price that you’re paying for and also how to do it while you place the order for the actual option.
What is an OCO Order?
An OCO Order is a One-Cancels-Other order. What that means is, when you place this order, you’re placing two orders essentially: a limit order and a stop order. Whichever one gets filled first, it will cancel the other one automatically. And what that does is it’s great for people who only trade at night and have day jobs. You can place a stop order and a limit order, so if you hit your target, you’d capture profit and you’re out. Or if you hit your stop, you’re also out and it will cancel the limit order.
OCO Order Example
We’re going to do this trade on the S&P 500, the SPY. I’m definitely not recommending this trade. I’m just using this as an example. So we are going to the trade tab. In our Market Timing Service, we typically go with a 70% delta in the money option. Let’s just go ahead and do that now. And typically, when you go to buy the option, you would do what I just did. You would just left-click and just hit “Buy.”