Section 4

Option chain

Option chain is the live price sheet of options trading for a given stock, annotated with critical metrics to help your trade decisions.

Puts

1. Put and call selector

   Switches between puts and calls.

2. Top-of-cell measure

   When looking at a put option chain, this button cycles through which metric is displayed in the top half of each cell. Annualized yield is the default. The value in the bottom half of each cell is always the dollar price of the given option contract (using either mid-market or appropriate bid/ask, based on user settings).

   • Annualized yield. Combines the option premium with any eligible interest on collateral, and presents it as an annualized yield on the pledged capital supporting the trade. This is the annualized return the investor will achieve if the option is not exercised.
   • Volatility-adjusted yield. Annualized yield divided by option implied volatility. It is a comparison measure for judging how much return is earned for the risk incurred. It is not a probability or expected return.
   • Option delta and option implied volatility. Option delta measures option-price sensitivity to a $1 stock move and is commonly used as a rough probability of finishing in the money. Option implied volatility is the market's view (as inferred from quoted option prices) on how volatile the stock will be from now to expiration.
   • P/E quartile if exercised. Places the company’s projected price-to-earnings ratio at the given strike and expiration within its own historical trading range. Q1 is cheapest, and means the PE at the given strike price is among the 25% cheapest P/Es seen for this stock in the recent few (currently 3, where available) years; and Q4 is similarly the most expensive.

3. Return on capital

   Normally, yields in YieldGen are calculated based on the full underlier amount of short put options, notably ignoring any long puts that may hedge the risk and reduce the collateral requirement significantly on the contemplated trade. This button toggles between that treatment (the default), and the "true return on capital" view, in which yield is based on the actual broker capital requirement. In the default calculation of yields, any leverage in the portfolio (defined as aggregate full underlier amount of all short puts exceeding CCE balance in the account) is visible as un-leveraged yield percentages applied to a greater CCE balance than actually exists in the portfolio. In the true return-on-capital calculation of yields, leverage is visible as much higher yield percentages, but with those percentages applied to just the true broker-required collateral amount. These are just two different views of the same portfolio dynamics: for example, the first view may show you earning 20% yield on a balance of $1M (even though your true CCE balance is $100K), while the second view may show you earning 200% yield on the true $100K CCE balance. Again these are just two ways to calculate or view the $200K of income you'll receive if any short put options are not exercised.

4. Spread mode

   Indicates intention to select a two-leg option spread, instead of a simple (single-leg) short put. When selected, the user first identifies the desired short leg of the trade, then the app displays only contracts eligible to be the long leg (i.e., contracts with lower strike and same or later expiration as the short leg), revises all on-screen metrics to be the net metrics of the overall spread if the given cell is selected as the second (long) leg, and finally allows the user to select that second leg before navigating to the option detail screen.

5. AI chain scan

   Highlights contracts that meet the selected analysis criteria and portfolio context. Other contracts remain visible but dimmed. Clearing the scan restores the normal option chain.

6. Refresh quotes

   Refresh quotes and re-draw option chain with refreshed detail.

7. Stock info

   Navigate to the detail page for the stock itself (not any of its options).

8. Quote and liquidity marks

   Teal marker indicates missing price (either bid or ask or both are zero). Yellow indicates a liquidity warning; red indicates poor liquidity. These liquidity classifications use Open Interest on the contract, along with the bid-ask width calculated as a percentage of the strike price. These liquidity cutoffs can be adjusted in user settings.

9. Calendar and volatility events

   Vertical lines show when the next earnings (red line) and ex-dividend (blue line, not shown) dates occur. Pink shading indicates any dates for which elevated volatilities are observed in the quoted option prices themselves. These will often coincide with earnings dates, but may occur for any reason, including anticipated product announcements, court or regulatory rulings, industry events, or anything else.

10. Contract selection

    Select any cell to open Detail for that contract.

Calls

On-screen controls and features are generally the same between put and call chains, except for one button specific to calls.

1. Recovery display

   Toggles between percent (default) and dollar display for the implied recovery shown in the top half of each cell. This value is displayed only when the account holds at least 100 shares not already linked to an existing covered call; otherwise it displays as blank.

   The implied recovery is the recovery that will be achieved if the call is exercised. For example for the highlighted cell in this call chain (which is for a $355 strike), the all-in income of $365.35 ($355 strike + $10.35 premium to be received) accomplishes 107.3% recovery (or a 7.3% profit) if the call option is exercised.