We’ve been proud to deliver top-quality tools and services to the option investment community for the past decade. However, in that time we’ve received tons of feedback that the entire industry wasn’t properly serving its membership with the tools it needs to effectively organize their various strategies.
A workspace to monitor Fed moves
Around a year ago we set out on a journey to update Quantcha to provide tools to meet these needs. Our vision was to deliver a workspace-driven user experience where users would be able to precisely customize each workspace to fit their exact needs for the task at hand. This customization would come in the form of task-focused widgets designed to chart quotes, track trade ideas, manage orders, and so on. The scenarios were endless, so we knew it needed to be flexible.
Qwidgets Home view
As we started showing our industry partners early demos of this new feature—which we were calling Quantcha Widgets—there was consistent feedback that it would be really helpful to a much broader audience than our traditional options investor customers. As a result, we made the decision to launch it as a separate service called Qwidgets and make it free for everyone.
Integrated brokerage support
We also knew that users relied on a lot of data and functionality beyond what we delivered. To meet those needs, we partnered with some of the best names in finance to integrate brokerage, news, analysis, social media, and more. We envisioned a platform where anyone could place and manage orders alongside the latest research and breaking developments.
Integrated trade analyzer
To use Qwidgets you’ll need to create a new account that’s separate from your Quantcha account. However, you can then link your Quantcha account in order to enable some advanced options-focused features, such as pages and widgets for screeners and the trade analyzer. Over time we’ll be migrating all of our Quantcha functionality to Qwidgets so that subscribers can enjoy the full depth of our functionality on either platform.
We’re proud to announce that we have launched our integration with Charles Schwab. This enables Charles Schwab brokerage customers to manage their account positions and orders directly from Quantcha. Create and link your account today.
The Quantcha Options Suite complements Charles Schwab’s existing options platform with sophisticated options book management, detailed trade reporting, proactive alerts, and a wide variety of trade discovery and analysis tools.
At this time our Schwab integration relies on Quantcha’s 20m delayed data feed. When Schwab publishes their market data API we will update our integration implementation to use it.
We’re excited to share a new way for investors to try out Quantcha Options Suite at no cost. Effective immediately, all users linked to a supported brokerage account will receive full subscription access for the first five days of each month (May 1-5, for example). This temporarily elevated access requires no additional steps beyond linking the brokerage account with their Quantcha account and includes the full functionality of a subscription.
Quantcha currently provides integration with major brokerages, including Charles Schwab’s TD Ameritrade, Morgan Stanley’s E*TRADE, and Tradier. To learn more about our brokerage integration, please see the documentation.
We’re proud to announce the launch of our new portfolio stress tester. It provides a straightforward experience for investors to project how their portfolios will handle arbitrary market conditions at a future date, including changes in interest rates, as well as underlying prices and volatilities.
The stress tester complements our powerful book manager to further equip investors with the tools they need to manage sophisticated option portfolios. Whereas the book manager provides superior in-depth analysis and experimentation with underlying-specific books, the stress tester offers breadth analysis for potential market scenarios.
We’re proud to announce the launch of our new calendar search functionality. Modeled after the options search engine, the calendar search makes it easy for investors to identify optimal calendar spread opportunities based on an underlying, a timeframe, and a price target range.
In addition, you can also use a variety of filters to zero in on the near and far legs based on expiration ranges, delta requirements, and strikes. There are also net Greek filters so that you can zero in on trades that meet specific criteria.
This launch also includes several key updates to the trade analyzer, including support for analyzing any trade on an expiration at or before the earliest-dated option leg. While the book manager provides the ultimate flexibility for modeling trades and complex strategies, this addition to the trade analyzer makes it easier to evaluate prospective trades before merging them into existing books.
We’re proud to announce that we have launched our integration with E*TRADE. This enables E*TRADE brokerage customers to manage their account positions and orders directly from Quantcha. In addition, linked brokerage customers enjoy real-time quotes throughout the platform. Create and link your account today.
Managing an E*TRADE Options Book
The Quantcha Options Suite complements E*TRADE’s existing options platform with sophisticated options book management, detailed trade reporting, proactive alerts, and a wide variety of trade discovery and analysis tools. To learn more about how Quantcha can complement E*TRADE’s existing option trading experience, check out our integration launch video on YouTube.
We’re proud to announce the launch of two major initiatives designed to help investors be more successful: Quantcha Learn and InvestOps.
Quantcha Learn
Quantcha Learn, available at https://docs.quantcha.com/learn, is our new online course library. Anyone can follow the lesson-based curriculum to learn about investing, financial engineering, and Quantcha through carefully structured courses. These courses include instructional content, hands-on exercises, and quizzes to help check your knowledge.
Everything in Quantcha Learn is freely available to anyone. You don’t need to register to access the content, although registering with Quantcha Learn makes it easier for you to track your progress through courses over time.
We plan to regularly release new courses covering a wide range of topics related to options and Quantcha.
InvestOps
Part of our culture at Quantcha is to proactively seek feedback from investors so that we can consistently improve our platform. Besides feature ideas, one thing people at every level of experience tell us is that they’re looking for ways to evolve their investment process with more structure.
To help with that, we are publishing the investment process patterns we reference internally when building Quantcha. We call this process InvestOps, which is shorthand for investment operations. It’s not guidance on the kinds of investments you should make, but rather a structured approach in how to build and manage an investment plan. While it’s not specific to options investing, it was developed from years of experience building tools for options investors.
InvestOps courses
We’ve published a series of three Quantcha Learn courses to help you get started:
Getting started with InvestOps explains the different stages and offers some starter document templates for managing the process.
Applied InvestOps walks through a real-world investment scenario using InvestOps.
InvestOps with Quantcha helps you understand how the different parts of Quantcha can be used in different InvestOps stages.
We’re proud to announce the launch of Quantcha Alerts, a new
feature designed to deliver proactive notifications to support your options
investing. Want to receive an email when a stock crosses a price threshold, a
trade reaches a target profit, or a book exceeds a delta range? Quantcha Alerts
is for you.
Configuring alert properties
Alerts are configurable. You can combine a variety of alert conditions, which include timeframes, stock and option properties, and portfolio scenarios, such as likely option assignment, to receive alerts when key opportunities and risks arise.
A sample alert notification
Alerts are customizable. Every condition allows you to specify parameters that fine-tune the type of notifications you receive and when. You can decide how far out to keep an eye on ex-dividend dates, and at what assignment risk you’d like to be alerted for your short calls.
Configuring an Option Assignment condition
Alerts are integrated. If you link a brokerage account with Quantcha, you can configure alerts that watch your portfolio for important conditions, such as approaching earnings dates or opportunities to close positions at a desired price.
We’re proud to announce that we have launched our integration with TD Ameritrade. This enables TD Ameritrade brokerage customers to manage their account positions and orders directly from Quantcha. In addition, linked brokerage customers enjoy real-time quotes throughout the platform. Create and link your account today.
Managing a TD Ameritrade Options Book in Quantcha
The Quantcha Options Suite complements TD Ameritrade’s existing options platform with sophisticated options book management, detailed trade reporting, and a wide variety of trade discovery and analysis tools. To learn more about how Quantcha can complement TD Ameritrade’s existing option trading experience, check out our overview video on YouTube.
Linking a TD Ameritrade Brokerage Account in Quantcha
A few months ago, we launched Quantcha Unlimited—an offer that bundled our options trading platform with commission-free trading—for just $99/month. The response we’ve received since then has been pretty surprising.
First, a lot of people have seen the offer and jumped on it immediately. This part actually wasn’t surprising at all. They’ve come from across the investor spectrum, from beginners to seasoned veterans. It doesn’t take much experience to understand that you need high-quality tools to succeed in options trading. You also need extremely low transaction costs to make sure that you keep the lion’s share of your profits. We offer both, and most people love it when they see it.
But are we for real?
At the same time, we have also received our fair share of disbelief and skepticism. You can’t blame investors for being cynical. There are so many empty promises and downright scams out there that it’s become impossible to believe offers that seem to good to be true. Some companies charge 10x more than we do for their tools, so could we really deliver a compelling product at this price point? And how good could the trading experience really be if our flat fee was less than a few days of trading commissions on the major brokerages?
We also don’t have much brand recognition. We don’t spend on
advertising, so most of our customers have come through direct outreach and
word-of-mouth. But over the past five years we’ve quietly evolved into a
company that offers one of the industry’s most comprehensive options platforms.
Our features meet the demanding needs of investors, provide seamless brokerage
integration, and include commission-free trading. Across our trading platform,
custom APIs, and proprietary data feeds, our customers scale from legions of
successful retail and professional traders all the way up through several of
the world’s largest hedge funds, market makers, and quant traders. But not
everyone is sold on who we are and what we offer.
Taking The Quantcha Challenge
To help address these concerns, we kicked off an initiative in January of this year called The Quantcha Challenge. This endeavor is a reference to the famous marketing campaign Pepsi launched in 1975. At the time, Pepsi was nearly a century old, but they were somewhat of an upstart rival to the dominant Coke. They believed they had a superior product, but getting diehard Coke fans to even try it was difficult. So, they found the best way they could to get people to give them a shot—and it worked. If you bought Pepsi stock back then, it would have returned you nearly 200:1 by now.
I didn’t think it would be appropriate to hang out in a
supermarket parking lot trying to get people to drink a brown liquid out of an
unmarked Dixie cup, so we took a slightly different route to prove our point.
We started The Quantcha Challenge on January 9, 2019, with an empty $26K portfolio. We have since broadcast live on YouTube every market day showing how we use our own tools to build and manage a real-money portfolio. No cuts, no editing, no safety net. Along the way we also answer user questions, discuss option & market theory, and highlight our new and continuously expanding features.
Goals of The Quantcha Challenge
While our primary goal is to help people see the platform in action, we also put some basic parameters in place for managing a successful portfolio. We want to be responsible with our investments, so we minimize our portfolio’s volatility through position sizing and opportunistic hedging. We also use our tools to keep our overall positions in a beta-weighted-delta-neutral state. In other words, we want to build a portfolio that grows in value regardless of the movement of the overall market. We spend a great deal of time in the broadcasts explaining why we take on the trades we do, as well as how to understand how a given trade impacts the portfolio’s exposure to the market at-large. Plus, our platform is designed to make things like this incredibly easy to understand and implement.
Analyzing How a Prospective Trade Impacts Underlying Book and Overall Portfolio Metrics
In addition to minimizing the volatility of our performance,
we also set a somewhat conservative goal: gain 1% in our first month. This
might seem pretty modest, but we felt it was realistic to set the tone for our
risk tolerance (or aversion). It would also be a good way to illustrate how
well our tools would perform in finding profit without taking outsized risks.
And if we could show how to consistently return that 1% every month, regardless
of the market, it would be a great run.
So, how did we do?
From a user education perspective, it was a smashing success. We were able to trade a wide variety of stocks using a wide variety of option strategies.
The Quantcha Challenge Trade Distribution
We showed off a considerable portion of our platform, and really punctuated how our underlying integration with Tradier delivers an extremely productive and seamless user experience.
The Quantcha Challenge Portfolio Allocation At One Point
And the best part was that we showed everything live so you could understand exactly what to expect as a Quantcha Unlimited customer. You get to see everything from trade idea genesis and optimization all the way through order fulfillment. This includes the quality and speed of the fills we get. This is a really important consideration for every investor, so please check it out in the videos and you won’t be disappointed. (In the interest of full disclosure, we got some feedback that watching us shave bid/ask spreads during order placement got boring, so we started managing them off the air.)
Now let’s talk about commissions
I mentioned earlier that we were surprised by some of the responses we received from some prospective customers when pitching our commission-free offer. Believe it or not, there are a lot of people out there who simply don’t mind paying a ton in commissions. As someone who has had many months where my commissions were in the thousands of dollars, I can understand where they’re coming from. But those days are long behind me now, and I hope they will be for you, too.
Let’s discuss the impact commission-free trading has on options investing. It is a monumental game-changer, especially when we have the tools to really take advantage of it. Let’s start off by reviewing The Quantcha Challenge portfolio returns since its launch a few weeks ago.
The portfolio started with a cash balance of $26,024.77. Setting aside the $99 monthly fee for Quantcha Unlimited, the closing value after 17 trading days was $26,884.22 for a 3.3% gross gain of $859.45. We filled well over 50 individual trades, but we’ll use that number to be conservative. Those trades covered a total of 657 contracts, and we had one leg assigned and another exercised. As a side note, our efforts to maintain low volatility of returns was successful as our lowest point was only down -0.68%.
The economics of commission-free trading
If we used a major brokerage that has a per-trade and
per-contract commission structure, we’d expect to give up a lot of this gross
profit. But exactly how much? Well, let’s take a look at some representative
structures that may or may not line up with the latest published data from the
sites of major brokerages.
First, what about $6.95 per trade and $0.75 per contract
with a $19.99 exercise/assignment fee?
Per Trade
Per Contract
Assign/Exercise
Monthly
Total Cost
Net
Return
$6.95
$0.75
$19.99
$0
$880.23
-$20.78
-0.08%
We would have paid more in commissions than we made. It
might seem unbelievable, but we’d actually manage to turn a 3.3% gross profit
into a loss. It would be bad (for us, at least).
Here’s another example of a possibly theoretical broker with
a more competitive commission structure.
Per Trade
Per Contract
Assign/Exercise
Monthly
Total Cost
Net
Return
$4.95
$0.65
$4.95
$0
$684.45
$175
0.67%
This is somewhat better, but that’s not saying much. I guess
at least we’d get to keep around a quarter of the profits. It would still be a
bummer to not reach our 1% goal.
The numbers are clear. With Quantcha Unlimited, you keep more of your profits. But commission-free trading is about so much more.
Intangible benefits of commission-free options trading
One major benefit is the frequency we can hedge and day-trade options. We’re not talking about “get rich quick”-style day-trading, but rather the kind of trades we place and decide to adjust once or more over the course of that same day. When we have to consider per-trade and per-contract commissions, it really disincentivizes us from updating positions to meet the goals we have for our portfolio. Even when the transaction costs may not be prohibitive, sometimes it’s just a psychological pressure that we don’t want to “waste” a few dollars on what might already be a razor-thin trade margin.
Modeling a Minor Position Roll To Capture More Profit
This also applies to partially filled orders. Sometimes we manage to nail the pricing so perfectly that we can only get part of our order filled. But then the opportunity changes and we’re stuck with part of our order unfilled. With per-trade commissions, you’ll typically need to pay a new trade commission if you cancel and replace the remainder of your order at a new price. Without per-trade commissions, it doesn’t matter how many separate trades it takes to get your quantity filled.
Complex Order Trade Ticket
Commission-free trading also expands the world of options we
can profit from. We don’t need to worry about transaction costs eating heavily
into options trading in the pennies whether opening or closing. We can just
place the trade that’s right for our portfolio.
Another major impact of commission-free trading is that it reduces the costs of legging in to and out of positions. Sometimes we have to be creative about getting the best entry, and legging in or out of illiquid options or complex trades with fewer potential counterparties is the only way to get the best pricing.
A real-world example
A good example of these benefits is an overnight Symantec earnings trade we placed for The Quantcha Challenge portfolio. The options weren’t particularly liquid, so we had to separate each leg of our calendar straddle into its own order. As part of this, we received some partial fills and had to replace those orders at different pricing to get the full positions we wanted.
Modeling a Calendar Straddle for Symantec Earnings on 1/31
The next day, we decided to roll one leg up to capture some short-term profit while closing the others out one by one. We were able to more than double our original $900 investment, which was great. However, with leg quantities of 69, 69, 40, and 40 contracts, we would have racked up nearly $300 in transaction fees with one of the major brokers.
Symantec Earnings Trade Tracking After Close on 2/1
