Most equity markets have had a 20+% gain in less then a month. You may have been left with, or accumulated, many stocks and/or options positions over the last year. You may have been holding on to these positions for sometime now, without knowing what your overall market risk is. How can you look at a portfolio of many different stock/option products and compare them to one product? Beta weight your portfolio my friends! Beta-weighted deltas simply let you compare the delta risk across different positions and with "one click" sum them to see the delta risk of your entire portfolio! For example, 100 shares of POT and 100 shares of GE each have a delta of 100, but you can't just add them together to get a portfolio delta of 200. You have to convert the deltas to beta-weighted deltas. The TOS platform will do that for you automatically, making it easier for you to evaluate your risk. As you can see in this account, we have a delta of -2135.12. We also have a positive theta of 547.28, so there are many option positions too!

To use this feature, click on the gray box next to the word "Beta Weighting NOT WEIGHTED" in the middle right hand corner of the Position Statement section of the Monitor page.



Then click on the small check box that says "Beta Weighting." You will see a blank box open up. You can put a symbol in there, such as SPX, and hit the enter button.



If you type in SPX to beta weight the deltas in terms of the SPX, you will see a beta weighted delta on this account of about -114. That means that theoretically, this total portfolio position would make or lose $114.00 if the SPX moved $1.00. What beta-weighted portfolio deltas let you do is see the risk of all your stock and option positions in terms of a single index. As you can see, this portfolio has a beta-weighted position of -113.98, significantly different from the -2135.12 non-weighted deltas. You may want to make sure that you entire portfolio does not exceed a certain delta parameter. For example, if you don't want your portfolio risk to exceed +/- 200 SPX deltas, or +/- 1000 QQQQ deltas, you can use the beta weighting tool to see your risk based on whatever index you want. The risk of this tool is that betas are not necessarily stable or absolute. That is, if a stock has a beta of 1.50, there is no guarantee that the stock will move 1.50 as much as the SPX over the next day, or week, or month. But for me it is the best indicator of your portfolio risk, allowing you to think about hedging or reducing positions if that risk exceeds what you are comfortable with. If you want to switch back to non-beta weighted deltas, just click on the blue arrow and uncheck "Beta Weighting." Happy trading!

thinkorswim, Inc. and its registered employee, Tony Battista, do not solicit or recommend any form of trading in the individual stocks (or their derivatives) mentioned above. Please do careful, independent research before investing any money as well as weigh the possible consequences on your particular financial situation before doing so. The risk of loss may be substantial.