U.S. patent application number 14/097539 was filed with the patent office on 2014-04-03 for trading system and methods.
This patent application is currently assigned to optionsXpress Holdings, Inc. The applicant listed for this patent is optionsXpress Holdings, Inc. Invention is credited to David S. Kalt.
Application Number | 20140095377 14/097539 |
Document ID | / |
Family ID | 39714302 |
Filed Date | 2014-04-03 |
United States Patent
Application |
20140095377 |
Kind Code |
A1 |
Kalt; David S. |
April 3, 2014 |
TRADING SYSTEM AND METHODS
Abstract
The present invention is directed to a system and method that
facilitates the more fully informed and efficient trading of items
of value, including securities. According to the present invention,
certain embodiments permit a customer to determine the merits of
and to execute a trade from a single screen. One embodiment of the
present invention provides a single option chain trading screen
enabling a customer to view a matrix of all available options for a
given security, including the various strike prices, expiration
dates, and whether they are calls or puts. Another embodiment
provides a customer with a single option chain trading screen
allowing a customer to "hover" at or near various icons to obtain
supplemental information without leaving the trading screen, and
use a triple-action selection component to ultimately execute a
trade.
Inventors: |
Kalt; David S.; (Glencoe,
IL) |
|
Applicant: |
Name |
City |
State |
Country |
Type |
optionsXpress Holdings, Inc |
Chicago |
IL |
US |
|
|
Assignee: |
optionsXpress Holdings, Inc
Chicago
IL
|
Family ID: |
39714302 |
Appl. No.: |
14/097539 |
Filed: |
December 5, 2013 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
|
|
12074265 |
Feb 28, 2008 |
8628150 |
|
|
14097539 |
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60904028 |
Feb 28, 2007 |
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Current U.S.
Class: |
705/37 |
Current CPC
Class: |
A43B 13/026 20130101;
G06Q 40/06 20130101; A43B 23/087 20130101; A43C 13/00 20130101;
G06Q 40/04 20130101; A43D 999/00 20130101; A43B 13/12 20130101 |
Class at
Publication: |
705/37 |
International
Class: |
G06Q 40/00 20120101
G06Q040/00 |
Claims
1. A computer-implemented method for facilitating trading in one or
more items by a customer, the method comprising the steps of:
providing a computer trading screen with a plurality of icons
representing information linked to the one or more items, a
plurality of trade checkboxes and a plurality of supplemental
information that can be accessed by the customer by hovering a
screen indicator at one or more of the icons; displaying on the
computer trading screen the supplemental information as the screen
indicator hovers at the one or more of the icons, the supplemental
information comprising one or more selected from a group consisting
of: a chart, a percentage, a real-time quote book.
2. The method of claim 1, wherein the group further comprises of: a
Greeks book, a quote box, a trade calculator, a price improvement
box, a watch list, a pricing ticket, a theoretical buying power
box, or a trade ticket.
3. The method of claim 1, wherein the one or more items is a
security option.
4. The method of claim 1, wherein the percentage is a price of a
security option that is an intrinsic value.
5. The method of claim 1, wherein, wherein the percentage is a
price of a security option that is a time value.
6. A computer system for trading one or more items, by a customer,
comprising: a screen component configured to display a plurality of
icons; a screen indicator configured to be movable on the screen
component, the screen indicator configured to hover at or near one
or more icons of the plurality in order to activate an inset of
information on the screen component, the inset of information
comprising one or more selected from a group consisting of: a
chart, a percentage, a real-time quote book.
7. The system of claim 6, wherein the group further comprises of: a
Greeks book, a quote box, a trade calculator, a price improvement
box, a watch list, a pricing ticket, a theoretical buying power
box, or a trade ticket.
8. The system of claim 6, wherein the one or more items is a
security option.
9. The system of claim 6, wherein the percentage is a price of a
security option that is an intrinsic value.
10. The system of claim 6, wherein the percentage is a price of a
security option that is a time value.
Description
CROSS REFERENCE TO RELATED APPLICATIONS
[0001] This is a continuation application of U.S. application Ser.
No. 12/074,265 filed Feb. 28, 2008, which claims the benefit of
U.S. Provisional Application No. 60/904,028 filed Feb. 28,
2007.
FIELD OF THE INVENTION
[0002] The present invention is related to the field of trading,
and, more specifically, to an improved mode of online communication
by which the trading of an item utilizing certain embodiments, a
single screen is facilitated.
BACKGROUND OF THE INVENTION
[0003] Those engaging in the trading of items through the online
access of a computer system often need additional information to
determine the details of that which is being offered as the subject
of the trade, to gauge the merits of the trade, and possibly plan a
more involved trading strategy. For purposes of this application,
the term "trading" includes the transfer of any consideration for
the subject of the trade--termed "item" herein--and the ordering of
one or more items. An "item" may be anything of value including a
financial security, for example, stocks, commodities, bonds and
derivatives such as futures, forwards, options, and swaps. A
"customer" is any individual or entity that may, or does engage in
the trading of items whose value varies according to market
perception such as coins, stamps, books, objects of fine art,
craftsmanship, and those having historical significance, among
others. A customer is also referred to herein as an investor for
purposes of this application. The present invention has application
to all such items, including properties and securities, that may be
bought and sold in a generally open marketplace at a price that
varies according to market perception, including with respect to
the trading of stock equity options. Embodiments of the present
invention will be described by reference to one type of
item--security options--but has utility with respect to all
items.
[0004] Security options--such as stock options--are essentially
contract rights that can be bought and sold on the open market. By
paying a certain premium amount, the owner of an option acquires
the right to buy or sell the underlying security at a designated
strike price during a limited period of time prior to expiration of
the option. Buyers and sellers of options are termed "holders" and
"writers", respectively. A "call option" is an option to buy a
certain security at a specific price on or before a certain date.
If the underlying security increases in value over the strike
price, the value of the call option then increases, as well. The
owner of a call option may exercise the right to purchase the
security before the expiration date of the option, logically
whenever the security exceeds the strike price, at which time the
option seller becomes obligated to sell the security. If the
security does not exceed the strike price, the owner has lost
nothing more than the price paid for the option, or the option
premium. A "put option" is an option to sell a security at a
specific price on or before a certain date. The owner of a put
option may exercise the right to sell the security before the
expiration date of the option, logically whenever the security
falls beneath the strike price, at which time the option seller
becomes obligated to buy the security. If the security does not
fall beneath the strike price, the owner has again lost nothing
more than the option premium.
[0005] To offset potential financial liabilities that might
otherwise accrue from changes in the value of an underlying
security, investors often seek to acquire option rights as a type
of financial insurance policy. Similar to paying an insurance
premium, the cost of buying call options becomes a standard
business expense, required for proper risk management. In like
manner, investors sell put options to obtain a calculable minimum
return on investments as a means for ensuring against financial
risk. Separate and apart from their risk management function,
security options may furthermore provide investors with a
potentially lucrative trading instrument, allowing for investment
in the performance of the underlying security with a lesser amount
of investment capital required.
[0006] Investing in options typically requires specialized
financial knowledge. Without it, individual investors may not be
aware of the benefits and opportunities that trading in certain
options provide, nor the range of possible trading strategies.
However, the average individual investor typically does not have
access to the same quantity and quality of market information that
is ordinarily available to those routinely involved in trading
options.
[0007] Securities web sites are popular because they allow
investors to manage investment information. Financial institutions,
including brokerages, have implemented online services that allow
investors to engage in trading of various securities over data
communication networks, including the Internet. As used herein, the
terms "order", "trade", and/or "trading" generally refers to
transactions such as buying and/or selling. Any investor having
access to the Internet may more directly engage in trading activity
without having the need to speak to a broker to enter his or her
orders in the marketplace for execution.
[0008] In addition to the many advantages that may be realized in
standard accounting procedures, brokerage firms dealing in
financial securities have sought to expand their capabilities for
improved interactive computerized communication with their
individual retail account investors. Prior to the appearance of the
Internet, trading orders from such retail investor clients could be
communicated only in person or via telephone, whether using voice
or fax transmission, or by delivery of the order through
conventional means such as the postal mail. Processing such trade
orders typically would require a certain amount of time--minimally
from perhaps a few minutes to as much as several hours or
more--thereby resulting in a lag in the amount of time before the
trade was executed. More recently, online communication
capabilities have made it possible for individual investors of
financial brokerage firms to have trade orders entered and executed
more rapidly, thereby decreasing the lag time to at times less than
one minute of lag time between the investor completing the entry of
the order online and receiving a reply confirming an online trade
confirmation communicated electronically.
[0009] In addition, and in further contradistinction to the fairly
limited range of standard and traditional types of trading
modalities that were previously available to their retail clients,
brokerage firms have begun to offer expanded modes of interactive
communication and a greater range of trading information, thereby
permitting individuals great control over their accounts.
[0010] However, while more and more information becomes available
online, the information often takes a great amount of time and
effort to access. Navigating to the various levels of information
then back to the screen at which the trade is executed is often
difficult and fraught with danger. Getting lost in these levels of
information may be a typical occurrence. Remembering what is
relevant to the trade while navigating back to the screen at which
the trade is executed is a challenge to most investors.
[0011] Therefore a need exists for a system and methods by which a
wide variety of information may be provided to an investor readily
and, in certain embodiments, without navigating away from the
screen at which the trade can be executed. The present invention
satisfies the demand.
SUMMARY OF THE INVENTION
[0012] In one embodiment, the present invention is a method for
facilitating trading in one or more items by a customer. Items
include anything of value including a financial security, for
example, stocks, commodities, bonds and derivatives such as
futures, forwards, options, and swaps. A "customer" is any
individual or entity that may, or does engage in the trading of
items, for example, an investor, trader, buyer, seller, holder, or
writer to name a few. According to the present invention, certain
embodiments permit the customer to determine the merits of and to
execute a trade from a single screen.
[0013] One embodiment of the present invention provides information
in the form of an option chain trading screen. An option chain is a
matrix that provides quote options prices through a list of all of
the options for a given security, including the various strike
prices, expiration dates, and whether they are calls or puts. The
option chain provides a single screen for the following types of
chains for a particular security: "calls and puts", "calls",
"puts", "call matrix", "put matrix", "pricer", "straddles",
"strangles", "covered calls", "call spreads", "put spreads",
"collars", "calendar call spreads", "calendar put spreads",
"diagonal call spreads", "diagonal put spreads", "implied
volatility", "butterfly call spread", "butterfly put spread", "iron
condor spread", "combos (short put/long call)", "futures chain",
"futures options" and "option chains". An option chain trading
screen enables a customer to view a matrix of all available options
for a given security, including the various strike prices,
expiration dates, and whether they are calls or puts. All calls and
puts for a particular security are viewed in a single screen along
with information on each call and put, for example, bids and asks
for each strike price and month. The present invention includes an
embodiment that includes a matrix through the use of which a
customer is able to view a plurality of available options for the
item.
[0014] The present invention is directed to a system and methods by
which an investor can engage in the fully informed trading of a
security utilizing a single screen that presents a wide variety of
information pertinent to a contemplated trade through a "hover" or
"roll over" feature. An embodiment according to the present
invention provides a customer with a single option chain trading
screen allowing a customer to "hover" at or near various icons to
obtain supplemental information without leaving the trading screen.
For purposes of this application, an icon is any representation,
including a picture, image, region, link, hyperlink, field, symbol,
area, button, or checkbox. As the customer hovers at or near an
icon, supplemental information is offered. For example, "hover"
features or "roll over" features include the display of a chart, a
percentage of the price of the option that is an intrinsic value, a
percentage of the price of the option that is a time value, a
real-time quote book, a "Greeks" book, a quote box, a trade
calculator, a price improvement box, a watch list, a pricing
ticket, a theoretical buying power box, or a trade ticket to name a
few. The customer simply places the screen indicator over an icon
that activates a pop-up of supplemental information. The pop-up
floats or levitates in the form of an inset in the option trading
screen. The "hover" feature of the present invention allows the
investor to maintain a single screen--the trading screen--thereby
eliminating the need to scroll or access more than one trading or
information screen.
[0015] In another embodiment, the present invention includes a
selection using what is termed for purposes of this application
"triple-action". "Action" includes any physical activity to
identify a selection, for example, clicks of a mouse, presses of a
button, or strikes on a keyboard. In one embodiment, a
triple-action selection formulates a trade by a customer as
follows: a customer uses a mouse to click an icon once to denote a
"buy"; the customer clicks an icon twice to denote a "sell"; and,
the customer clicks an icon three times to denote a "reset".
Triple-action selection is advantageous in that it allows an
investor to make multiple option selections at once. This allows a
customer to build a trade more quickly and easily.
[0016] Another embodiment provides a customer with a single option
chain trading screen allowing a customer to use a triple-action
selection component to formulate a strategy and ultimately execute
a trade. For example, multi-leg strategies, or spreads, are
provided by clicking, or selecting, an icon next to the option. A
"spread" is a limited risk, limited reward strategy established by
combining options that would, if separate, profit from opposite
moves in the price of the underlying. A "vertical spread" is
identified by selecting checkboxes for options that have the same
expiration but different strike prices. A "horizontal spread" is
also known as a time or calendar spread. This spread is identified,
and thereby established by selecting checkboxes for options with
different expirations but the same strike price. A "diagonal
spread" is identified, and thereby established by selecting
checkboxes for options with different strike prices and
expirations. It should be noted that in certain embodiments the
sequence in which the customer selects checkboxes does not indicate
any particular weight in the ultimate trading decision.
[0017] It is an added object of the present invention to provide
smart logic such that the investor is directed to the appropriate
trade ticket based on the selections made for the particular
option(s). For example, smart logic is an algorithm that determines
whether the trade is a single leg trade, butterfly, condor,
straddle, spread or multi-trade. A "single leg trade" involves a
trade of only one option by an investor. A "butterfly" is a limited
risk, limited reward strategy that involves four options (all calls
or all puts) at three different strike prices. A "condor" is a
limited risk, limited reward strategy with profit/loss
characteristics similar to a butterfly, but in this case, four
options at four strike prices are used. A "straddle" is an option
position in which a call and a put with the same strike price and
expiration are both bought ("long" straddle) or sold ("short"
straddle). A long straddle has unlimited profit potential given a
large move up or down. A short straddle has limited profit (if the
stock remains stable) and unlimited risk (if the stock moves
significantly in either direction. A spread may be vertical,
horizontal or diagonal. A multi-trade involves five or more
options.
[0018] According to one embodiment of the present invention, a
system includes a client system and a server system that are
connected via a communications link. The client system includes a
display component for displaying the plurality of icons as well as
the supplemental information that can be accessed by the customer
by hovering at or near one or more icons. A server system receives
data via the communications link from the client system. Data
includes, for example, a trade ticket as well as the fulfillment
and execution of the trade of the one or more items.
[0019] These, together with other objects and advantages, will be
further understood in the details of the construction and operation
of the invention as more fully hereinafter described, and with
reference to the accompanying drawings, forming a part hereof,
wherein the numerals refer to the like part throughout.
BRIEF DESCRIPTION OF THE DRAWINGS
[0020] FIG. 1 is an option chain trading screen according to the
present invention;
[0021] FIG. 2 is an option chain trading screen illustrating a
chart "roll over" feature according to the present invention;
[0022] FIG. 3A is an option chain trading screen illustrating a
real-time quote book "roll over" feature according to the present
invention;
[0023] FIG. 3B is an option chain trading screen illustrating a
Greek book "roll over" feature according to the present
invention;
[0024] FIG. 4 is an option chain trading screen illustrating an
intrinsic value and time value "roll over" feature according to the
present invention;
[0025] FIG. 5 is an option chain trading screen illustrating a
quote box "roll over" feature according to the present
invention;
[0026] FIG. 6A is an option chain trading screen illustrating a
border element according to the present invention;
[0027] FIG. 6B is an option chain trading screen illustrating a
price improvement box "roll over" feature according to the present
invention;
[0028] FIG. 7 is an option chain trading screen illustrating a
multi-leg strategy of a horizontal spread according to the present
invention;
[0029] FIG. 8 is an option chain trading screen illustrating a
multi-leg strategy of a vertical spread according to the present
invention;
[0030] FIG. 9 is an option chain trading screen illustrating a
multi-leg strategy of a diagonal spread according to the present
invention;
[0031] FIG. 10A is an option chain trading screen illustrating
trade manage buttons according to the present invention;
[0032] FIG. 10B is an option chain trading screen illustrating a
watch list "roll over" feature according to the present
invention;
[0033] FIG. 11A is an option chain trading screen illustrating
trade manage buttons according to the present invention;
[0034] FIG. 11B is an option chain trading screen illustrating a
pricing ticket "roll over" feature according to the present
invention;
[0035] FIG. 12A is an option chain trading screen illustrating
trade manage buttons according to the present invention;
[0036] FIG. 12B is an option chain trading screen illustrating a
trade calculator "roll over" feature according to the present
invention;
[0037] FIG. 12C is an option chain trading screen illustrating a
theoretical buying power box "roll over" feature according to the
present invention;
[0038] FIG. 12D is an option chain trading screen illustrating a
butterfly trade ticket according to the present invention;
[0039] FIG. 13A is an option chain trading screen illustrating
trade manage buttons according to the present invention;
[0040] FIG. 13B is an option chain trading screen illustrating a
multi-trade ticket according to the present invention;
[0041] FIG. 14A is a system block diagram according to the present
invention; and
[0042] FIG. 14B is a flow chart of the smart logic algorithm
according to the present invention.
DETAILED DESCRIPTION OF THE PRESENTLY-PREFERRED EMBODIMENTS
[0043] The system and methods of the present invention will be
discussed in the following with respect to the trading of security
options, more particularly a stock option. However, the present
invention can be used to facilitate more fully informed trading of
any security or any item of value.
[0044] FIG. 1 illustrates an option chain trading screen 50. The
screen 50 permits a customer to populate fields 205 within a
security information box 200 on the screen 50 by typing in
information, by selecting from a drop-down menu, or by selecting a
button. For purposes of this application, the term "customer"
includes anyone utilizing the system and methods according to the
present invention, for example, an investor, trader, buyer, seller,
holder, or writer to name a few. As shown in FIG. 1, a customer
populates security information fields 205 within a security
information box 200 including symbol 210, range 230, type of option
chain 250, and expiration of the option 270. Symbol 210 is a
mnemonic used to uniquely identify a particular security, here a
stock. Range 230 includes "near-the-money", "in the money", and
"out of the money". Usually, an "in the money" option goes up at
the same rate as the stock price. A "near the money" option usually
goes up at half of the rate of the stock price. An "out of the
money" option typically goes up very little compared to the stock
price. Types 250 of option chains include "calls and puts",
"calls", "puts", "call matrix", "put matrix", "pricer",
"straddles", "strangles", "covered calls", "call spreads", "put
spreads", "collars", "calendar call spreads", "calendar put
spreads", "diagonal call spreads", "diagonal put spreads", "implied
volatility", "butterfly call spread", "butterfly put spread", "iron
condor spread", "combos (short put/long call)", "futures chain",
"futures options" and "option chains". The expiration field 270
includes the month and year the offer--to either buy or sell--of an
option terminates. Upon populating these fields 205 within the
security information box 200, the investor selects the "view chain"
button 290 to view the quote box 300 and matrix chain box 400
according to the symbol 210 and type of option chain selected in
field 250.
[0045] The screen 50 includes a quote box 300. The quote box 300
includes regions 305 of symbol 310, last 312, change 314, bid 316,
ask 318, high 320 (not shown), low 322 (not shown), volume 324 and
chart 326. Symbol 310, again, is the mnemonic corresponding to that
entered in field 210 of the security information box 200. Last 312
is merely the last bid or ask that was previously entered. Change
314 is the percent difference between the bid 316 and the ask 318.
Bid 316 is the price point at which a buyer is willing to purchase
the given stock, or sell price. Ask 318 or buy price is the price
point where a seller would be willing to sell the given stock. High
320 is the highest price recorded for the trade day whereas low 322
is the lowest price recorded. Volume 324 is the number of shares
traded for the particular security, or symbol 310. Chart 326 is a
"hover" or "roll over" feature, such that the investor can display
a one-day chart of the stock symbol 310, as shown in FIG. 2.
[0046] Trading screen 50 also displays the matrix chain box 400,
which is a matrix of price quotes through a list of all options,
illustrated as option symbols 410 for a given security including
strike prices, expiration dates and whether they are calls 403 or
puts 404. The matrix chain box 400 includes expiration month links
402. Each expiration month link 402 is an icon that can be selected
to access supplemental information. The expiration month link 402
can be selected for further detail on the option as shown in matrix
chain box 400. Matrix chain box 400 displays all available option
symbols 410, including various information for each option symbol
410, in one page. The information includes, for example, last 412,
change 414, bid 416, ask 418, volume 420, open interest 422 which
is the number of option contracts that are open for buy or sell,
and strike price 424.
[0047] FIG. 2 is an option chain trading screen 51 illustrating a
"hover" feature 500. In this embodiment, the hover over feature 500
is a chart 510. An investor can obtain an expanded chart 510 of the
security symbol 210 or 310 (see FIG. 1) by "rolling over" the chart
region 326. It is contemplated that the "roll over" chart feature
510 is available for any type 250 (see FIG. 1) of option chain
selected. The "roll over" chart feature 510 displays a one-day
stock price versus time, although other features are contemplated,
for example, a five-day stock price or three month stock price.
[0048] FIG. 3A is an option chain trading screen 52 illustrating
another "hover" feature 500 of a real-time quote book 520 for a
specific option. An investor can obtain a real-time quote book 520
of the option by "rolling over" the option symbol 410 in the matrix
chain box 400 (see FIG. 1). It is contemplated that the "hover"
quote book feature 520 is available for any type 250 (see FIG. 1)
of option chain selected. The "hover" quote book feature 520
displays size and quote for the option symbol 410 the investor
"rolled over", here .OZCAN.
[0049] FIG. 3B is an option chain trading screen 53 illustrating
another "roll over" feature 500 of a "Greeks" book 530 for a
specific option. An investor can obtain a "Greeks" book 530 of the
option by "rolling over" a Greeks link 531. The "hover" "Greeks"
book feature 510 displays quantities representing the market
sensitivities such as implied volatility and Greeks values, such as
Delta, Gamma, Rho, Theta and Vega. An investor can switch back the
real-time quote book 520 (FIG. 3A) by rolling over a quote book
link 532.
[0050] FIG. 4 is an option chain trading screen 54 illustrating
another "roll over" feature 500 of value box 540 for a specific
option by rolling over the strike price 424 (see FIG. 1). The
investor views the value box 540 as an illustration of the
percentage of an option price that is intrinsic or time value.
[0051] FIG. 5 is an option chain trading screen 55 illustrating
another hover over feature 500 for an information area 550. The
information area 550 acts essentially as a quote box, but with more
detailed information. Each option includes an information symbol
551. The investor "rolls over" the information symbol 551 next to
the option to view the information area 550. The information area
550 includes detailed information regarding that particular option,
such as last trade, change, open, volume, bid, bid size, ask, ask
size, expiration, and open interest.
[0052] FIG. 6A and FIG. 6B illustrate another hover over feature
500. FIG. 6A is an option chain trading screen 56 with a spread for
price improvement embedded. A spread is a limited risk, limited
reward strategy established by combining options that would, if
separate, profit from opposite moves in the price of the security.
With a price improvement embedded, if a better price exists for the
given chain, the price of the ask or bid is highlighted by a border
element 552 as shown in FIG. 6A. As the investor hovers over the
border element 552, a price improvement box 560 results as shown in
FIG. 6B. FIG. 6B is an option chain trading screen 57 illustrating
another hover over feature 500 of a price improvement box 560 that
shows the available price improvement.
[0053] FIG. 7, FIG. 8, and FIG. 9 illustrate multi-leg strategies
600 using a triple-action selection feature. Each option symbol has
a corresponding checkbox 450. According to the present invention, a
triple-action selection feature allows an investor to select one of
three states in a checkbox 450--buy, sell, neither--wherein each
state is denoted by a click. For example, a first click within a
checkbox 450 for a option denotes a buy state, a second click
within a checkbox 450 for an option denotes a sell state, and a
third click within a checkbox 450 for an option denotes a reset
state such that the checkbox returns to its original unselected
state. It is also contemplated that a reset button may allow all
checkboxes to return to an original or unselected state.
[0054] FIG. 7 is an option chain trading screen 60 illustrating a
multi-leg strategy 600 of a horizontal spread 610. A horizontal
spread is also known as a time or calendar spread. This spread is
established by selecting options via checkboxes with different
expirations but the same strike price. As shown, the investor
selected a checkbox for a "buy" (one click) and a checkbox for a
"sell" (two clicks) for the same strike price of 52.0, but for
different expiration of April 2008 for the "buy" and May 2008 for
the "sell".
[0055] FIG. 8 is an option chain trading screen 61 illustrating a
multi-leg strategy 600 of a vertical spread 620. A vertical spread
is selecting options via checkboxes that have the same expiration
but different strike prices. As shown in FIG. 8, the investor
selected a checkbox for a "buy" (one click) and a checkbox for a
"sell" (two clicks) for the same expiration of March 2008 but
different strike prices--41.00 for the "buy" and 42.00 for the
"sell".
[0056] A diagonal spread is selecting options via checkboxes with
different strike prices and different expirations. FIG. 9 is an
option chain trading screen 62 illustrating a multi-leg strategy
600 of a diagonal spread 630. As shown, the investor selected a
checkbox for a "buy" (one click) and a checkbox for a "sell" (two
clicks) with different expiration dates and different strike
prices. The "buy" option has an expiration of March 2008 at a
strike price of 41.00 and the "sell" option has an expiration of
April 2008 at a strike price of 42.00.
[0057] Another advantage of the present invention is manageability
of option trades from a single screen, such as to determining the
merits of a trade or executing the trade, through the use of trade
manage buttons 700. FIG. 10A is an option chain trading screen 70
illustrating trade manage buttons 700. Trade manage buttons 700
include a reset button 705, add to watch list button 710, mini
pricer button 715, trade calculator button 720 and trade button
725. After an investor selects an option to buy or sell via the
checkbox 450 according to the triple-action selection feature
described above, the investor can reset the checkboxes 450 to an
unselected state by selecting reset button 705.
[0058] The investor can add certain options to a watch list. As
shown in FIG. 10A, the investor selects the options to buy or sell
via the corresponding checkbox 450. Upon the investor selecting the
add to watch list button 710, an option chain trading screen 71
illustrating a "roll over" feature 500 of a watch list 730 is
illustrated as shown in FIG. 10B. The watch list 730 includes the
type of watch list 732 and the option symbols 731 to add to the
selected type of watch list 732. The option symbols 731 correspond
to the selections of FIG. 10A.
[0059] FIG. 11A is an option chain trading screen 72 illustrating
trade manage buttons 700. Upon the investor selecting an option via
the corresponding checkbox 450, the investor can select the mini
pricer button 715 to analyze the theoretical value of the option.
FIG. 11B is an option chain trading screen 73 illustrating a "roll
over" feature 500 of a mini pricing ticket 740. The mini pricing
ticket 740 analyzes the theoretical value of the option according
to volatility, strike price, stock price, days to expiration,
interest rate and Greeks.
[0060] FIG. 12A is an option chain trading screen 80 illustrating
trade manage buttons 700. Upon the investor selecting an option via
the corresponding checkbox 450, the investor can select the trade
calculator button 720 to analyze the trade. The trade calculator
quickly displays the buying power required and the potential profit
or loss of the trade, before the customer's account is accessed.
The trade calculator allows the customer to check the potential
investment risk or reward of an order before it is placed. It also
allows the customer to apply different investment strategies. If
the investor selects the trade calculator button 720, the investor
is directed to trading screen 81 as shown in FIG. 12B, although it
is contemplated the trade calculator can be a "roll over" feature
500. The trade calculator 740 evaluates the buying power, or
potential investment risk or reward of the trade before the
investor executes the trade. Components of the trade calculator 740
include option symbol 741, action 742, quantity 743 and price 744.
The investor can apply different investment strategies by varying
any of these components. The trade calculator 740 also has a find
feature 745 to allow an investor to find a chain or futures based
on the selected option symbol 741.
[0061] After the investor enters the components 741, 742, 743, 744
of the trade calculator 740, the investor can clear all the
selections via the clear button 748 or view the result of the
spread by selecting the calculate buying power button 749.
[0062] FIG. 12C is an option chain trading screen 82 illustrating a
"roll over" feature 500 of the theoretical buying power box 750.
The theoretical buying power box 750 includes values of estimated
implied volatility, interest rate, chart date and dividends. These
values can be illustrated in a graphical format by selecting the
graph button 751. Selecting the graph button 751 produces
information of the entered trade 752, requirements for the trade
753, and profit and loss chart 754. The entered trade 752
summarizes the information entered from the trade calculator 740.
The requirements for the trade 753 breaks down the entire loss or
profit the investor would realize if the trade was executed. The
profit and loss chart 754 graphically illustrates the theoretical
buying power.
[0063] Turning back to FIG. 12A, if the trade button 725 is
selected, a trade ticket 800 results as shown in FIG. 12D. It is
further contemplated that the trade ticket 800 can be a "hover"
feature 500. FIG. 12D is an option chain trading screen 83
illustrating the trade ticket 800. Smart logic is an algorithm that
determines the appropriate trade ticket according to the options
the investor selected and directs the investor to the appropriate
trade ticket discussed more fully in reference to FIG. 14A and FIG.
14B. Smart logic determines whether the trade is a single leg
trade, butterfly, condor, straddle, spread or multi-trade and
provides the appropriate trade ticket. As shown in FIG. 12D,
butterfly ticket 801 summarizes the options selected via checkboxes
450 in FIG. 12A. Here a butterfly ticket 801 is used since the
order involves three call options each at a different strike price,
more specifically a sell call option at a strike price in between
the strike prices of two buy call options.
[0064] FIG. 13A is an option chain trading screen 84 illustrating
trade manage buttons 700. If the trade button 725 is selected, a
trade ticket results as shown in FIG. 13B. FIG. 13B is an option
chain trading screen 85 illustrating the trade ticket 800. It is
also contemplated that the trade ticket 800 can be a "hover"
feature 500. Again, smart logic of the present invention determines
the appropriate ticket according to the options the investor
selected and directs the investor to the appropriate trade ticket.
As shown in FIG. 13B, multi-trade ticket 802 summarizes the options
selected via checkboxes 450 in FIG. 13A. Here a multi-trade ticket
802 is used since the order involves three buy call options each at
a different strike prices, more specifically a sell call option at
a strike price in between the strike prices of two buy call
options.
[0065] FIG. 14A is a block diagram illustrating an embodiment of
the present invention. This embodiment supports the present
invention over the Internet using the World Wide Web. The server
system 30 includes a server engine 31, a client identifier 32, Web
pages 33, a customer database 34, a trade database 35 and a smart
logic algorithm 40. The server engine 31 receives requests to
access Web pages 33 identified by URLs and provides the Web pages
33 to the various client systems 20. Such a request may indicate
that the customer has performed the triple-action selection to
effect trading. The customer database 34 contains customer
information such as the name of the customer and billing
information. The trade database 35 contains a description of the
various securities or items that may be traded as well as those
trades that have been fulfilled or executed. The server 30
implements a smart logic algorithm 40 that registers the selections
made by the customer and associates the selections to a trade
ticket. The smart logic algorithm then populates the trade ticket
in order to execute the trade.
[0066] The client identifier 32 is an identifier that uniquely
identifies a client system 20. The client system 20 includes a
display component 21 and also contains a browser 22. A display
component 21 is a device conveying visual information, and may
further include tactile presentation of images (including text).
While most common displays are designed to present information
dynamically in a visual medium, tactile displays, usually intended
for the blind or visually impaired, use mechanical parts to
dynamically update a tactile image (usually of text) so that the
image may be felt by the fingers. Examples of display devices
include a television, monitor, plasma display, rear projector, or a
screen on the portable device.
[0067] In one embodiment, the server system 30 assigns and sends
the client identifier 32 to the client system 20 upon interaction
between the client system 20 and the server system 30. The server
system 30 and client system 20 interact by exchanging data via
communications link 25, which may include transmission over the
Internet. Data includes, for example, the fulfillment and execution
of the trade.
[0068] FIG. 14B is a flow chart of the smart logic algorithm 40
according to the present invention. According to the present
invention, the server 30 implements a smart logic algorithm 40. The
smart logic algorithm 40 registers the selections made by the
customer at step 41, for example selections made to checkboxes
using triple-action selection. After registering the selections as
step 41, the algorithm 40 associates the selection to the
appropriate trade ticket (single leg trade, butterfly, condor,
straddle, spread or multi-trade) at step 42. At step 43, the trade
ticket is populated with the trade selections in order to execute
the trade.
[0069] One skilled in the art would appreciate that the present
invention can be used in various environments other than the
Internet. Also, various communication channels may be used such as
local area network, wide area network, or point-to-point dial up
connection. Also, a server system may comprise any combination of
hardware or software that can execute a smart logic algorithm and
generate trades. A client system may comprise any combination of
hardware or software that can interact with the server system.
[0070] While the disclosure is susceptible to various modifications
and alternative forms, specific exemplary embodiments thereof have
been shown by way of example in the drawings and have herein been
described in detail. It should be understood, however, that there
is no intent to limit the disclosure to the particular embodiments
disclosed, but on the contrary, the intention is to cover all
modifications, equivalents, and alternatives falling within the
scope of the disclosure as defined by the appended claims.
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