I recently found the Fibonacci retracement tool and I tweaked it to show the 5% levels under the strike price, to very quickly visualize if the particular option is in the money, whether it needs to be rolled and how much.

TradingView

In TradingView, this tool can be activated from the left menu, as shown in the screenshot, knows as Fib Retracement:

Once active, you’d click on the strike price at the beginning date of the contract (ie. top left side) and click again on the end of the contract and as low as possible in the price range. It’s not very important where, as these values can be easily changed in the next dialog.

Once the drawing is placed, we will change its settings by clicking on the upper hexagon icon, to modify the coordinates and styles. The coordinates should be #1 the strike price, and #2 always zero.

The styles need to be changed to reflect the 5% increments, so these would be 0.95, 0.90, 0.85, 0.80, 0.75, etc. I changed the colors to use only one color and modified the background fill to be almost transparent; also removed the trend line and levels using their checkboxes.

Once it is all looking good, we can save this template for future use, by using the Template pull-down, hitting “Save as” and naming it. Below is how it looks once it’s placed on the plot. Obviously, every horizontal line is a 5% increment from the strike price.

ThinkorSwim

In ThinkOrSwim, the process is similar, though the tool has to be configured differently. You will find the Fibonacci retracement tool, while looking at a chart on the top bar, under Drawings. It’s a big percent sign on the Drawings menu.

Once the tool is active, you would click on the top left of the region where you want it (typically the strike price at the beginning of the contract) and then click again on the bottom right.

Now the drawing has been placed but its parameters need to be modified. We right-click on any of the lines, and select Edit properties.

There’s a few settings in this window that we change, namely the begin point (set value to strike and date), and the end point (set value to zero, and end date). Next, the coefficients must be changed to reflect the 5% increments as done in the previous section and also shown in the screenshot. I also changed the colors to something darker and unobstrusive. Once we are happy with the settings, we hit “Set as default”, to reuse them next time. The percentages shown in the drawing are reversed, but I found no way of hiding them as in TradingView.

Conclusion

This method of using the Fibonacci retracement tool is a great way to eliminate doing mental calculations every time a position needs to be assessed how much it’s in-the-money, and facilitates seeing this visually.