Tip #2002-4: A Better Way to Analyze Options
If you trade equity or index options you are well aware of the mind-boggling amount to of
real-time pricing information you need to view and manipulate to make a decision about implementing
a trading or investment position. The reason there are so many option contracts is because as the
underlying instrument moves up or down new contracts are added. Although option contracts expire,
the number of new contracts added usually exceeds the number of contracts that expire. There are many
option contracts, but only those with strike prices near the current price of the underlying instrument
are liquid.
The advantage of using chains is that they let you quickly retrieve all the related put and call
prices on a specific instrument. The disadvantage of chains is that they overwhelm you with data.
When you request an option chain on an equity instrument, along with the information you want, you
get an awful lot of information you do not want. Whether you are looking at the information in a quote
terminal or bringing it into Excel, you usually need to scroll through rows of data before you find the
specific option or options you want to trade.
One of the advantages of bringing an option chain into an Excel worksheet is that you can easily filter
the data and eliminate the information you do not want to see. Once you have the option pricing information
in a table, you can apply Excel’s Auto Filter and with a few mouse clicks you can hide the rows of data
you do not want to see. To show you how, we have created a workbook example which uses Bloomberg’s
Bulk Data
formula to retrieve an option chain on any equity or index instrument. This worksheet applet greatly
simplifies the process of trading and analyzing options.
Bloomberg Equity & Index Options Filter
How can I create my own?
Some Tips and Tricks for Better Design
Willow Solutions Inc. is a Microsoft Certified Partner with proven expertise and knowledge in developing
proprietary applications used primarily in the financial services industry. The company specializes in solutions
that combine the power of Microsoft Excel and Visual Basic, with an in-depth knowledge of financial markets.
Contact us if you would like to employ our services to help you enhance this model or help you design financial
models or customized applications.
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