View What-if Risk in the IB Risk NavigatorSM

Creating What-if portfolios and playing around with different adjustment ideas is easy once you know how. You can also just keep Risk Navigator open during the day and use it to monitor your risk levels. Risk Navigator gives you the ability to create custom scenarios with your portfolios. For example, you could take your current position and look at a scenario where 4 days have past, the stock has dropped 2% and implied volatility has increased by 5%.

To do this, right-click the contract in the report and select Tracker/Measure Beta…, then enter the user defined value that you want to override the historical estimate. To add some perspective here, consider that a portfolio with higher Beta weightings, is likely to respond more aggressively when the market rises. And conversely, losses are potentially larger when the market declines. For this portfolio, the adjusted Beta Weighted Delta dollar reading is therefore higher than under equal weighted rules. For an equal weighted display, you can see that for stocks, the readings of Value and Delta dollars are the same.

Adding and Removing Columns

The Interactive Brokers Risk Navigator is a fantastic tool that I use every day in my trading. However, it’s not very intuitive and new account holders often have no idea what it is or how to use it. It’s perhaps not as good as some of the functionality that Thinkorswim has, but it’s still pretty good. The tabs operate independently from each other so adding and removing data columns to one will not affect the others. Each tab will allow you to drill down into the specific instrument and measure potential risk and rewards from market movements.

In this what-if portfolio, I will add columns to demonstrate what we are looking at and highlight its importance as we progress. To begin with the display shows Underlying, Position, Mark and Value and I have added a handful of stocks to illustrate the concept of Beta or sensitivity to the market. Let’s follow the implication of the sensitivity of a stock to a benchmark through to a portfolio. If stocks behaved in a uniform fashion to the movement in a benchmark, for a given change in the benchmark, the component stocks would change by approximately the same amount.

Risk Navigator – Trading from the What-if

Investors buy stocks in the expectation that share values will increase. To measure overall performance, they like to compare their returns with a common benchmark such as the S&P 500 index. Over time, individual share prices form a relationship or correlation with the benchmark. Some stocks behave just like the benchmark, rising or falling exactly in line with it. Some stocks have inherent characteristics that make them behave in a certain way. Theta represents the portfolio’s sensitivity to the passage of time by indicating the rate at which the market value of your portfolio will change with time.

• Risk Navigator will give you a snapshot of how your portfolio will look, including the P&L and the new greek values.
• This lesson will use the Custom Scenario function in IBKR’s powerful Risk Navigator module to calculate the value of a single option through time under dynamic circumstances.
• Over time, individual share prices form a relationship or correlation with the benchmark.
• It provides you with data on your greeks and profit graph and also allows you to design trades and play around with different adjustment scenarios.
• The information sets include P&L, Value at Risk, Margin Sensitivity, and Margin Scenarios.

The IBKR Risk Navigator is a powerful standalone portfolio monitoring tool built to measure and aggregate real and what-if position exposure across all asset classes. The Model Navigator uses current market data along with interest and dividend values to calculate implied volatilities and

option model prices. Add your pricing assumptions and recalculate option prices based on your inputs. Model prices are

displayed in a range of colors for a quick glance indication of where they fall in relation to the current bid and ask prices. A beta-weighted plot better reflects the day-to-day statistical variation of the market prices. Understanding these alternate methods for portfolio monitoring purposes is important to risk managers.

IBKR Order Types and Algos

Before trading, clients must read the relevant risk disclosure statements on IBKR’s Warnings and Disclosures page. Securities or other financial instruments mentioned in the material posted are not suitable for all investors. Before making any investment or trade, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice. The Option Analytics window allows you to view the risk of your options portfolio by class, using the industry

standard Greeks, delta, gamma, vega and theta. The price plot for each contract shows how the contract price could change based on a change in the underlying. The IB Risk Navigator is a real-time market risk management platform that unifies exposure across multiple asset classes around the globe.

Access from the Edit dropdown menu and select from choices of either Custom or Date Interval range. The Custom Horizon allows users to determine the number of years, months interactive brokers hotline or days. The Date Interval allows users to select specific Start and End Dates. Each allows users to drive the calculation using daily, weekly or monthly computations.

IBKR Short Video: Introduction to IB Risk Navigator

Risk Navigator will give you a snapshot of how your portfolio will look, including the P&L and the new greek values. I use this only very occasionally, because I’m not convinced how accurate it is. During this course we will go over many of the ways you can use the Risk Navigator to monitor your portfolio and see the potential effects market forces may have on existing or theoretical positions. Each tab has its own unique report viewer, and they can be customized to show the data that is most important to you.