Using the thinkorswim® App for AI-Like Efficiency

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Narrator:

Hello. My name is David Bruner from the trade desk here at Schwab. Today we're going to be talking about the stock hacker tool on thinkorswim^®. This allows us to search for stock symbols that match your criteria. Today we're going to show you three different scans, where we'll look for stocks with momentum to the upside, stocks with high implied volatility that may make sense for an options trade, and stocks that pay dividends. Let's get started.

So, we're going to start here by going to the Scan tab and the Stock Hacker. So, the stock hacker is going to allow us to put in different criteria and different filters to scan for different stock results. So, jumping into our first scan here we're going to be scanning for bullish momentum stocks.

One signal that traders will use to determine if something is currently bullish and has momentum is going to be something called the Golden Cross. The 50-day moving average crosses above the 200-day moving average, signaling that the shorter time frame is currently on the rise compared to that longer time frame, which is considered the anchor. And some traders will consider this a buying opportunity or an entry point when they're choosing criteria on which stocks to buy.

To quickly show you around as we build our scan. Scan in allows you to decide what stocks to look at. There's a lot to choose from, but some examples are groupings like S&P 500 stocks, by sectors and industries, or even a watchlist we've created. Exclude allows us to block stocks from the jump. For example, let's say we wanted to disqualify all OTC stocks from our scan we could enter that here.

For our bullish crossover scan. We want to avoid cheaper stocks since they can be a bit more volatile. So, we're going to change our first filter to be the last traded price. And let's say we want to see a minimum of $5 on that. And then we're going to keep it simple. We're just going to look at the last traded price, we're going to remove these two stock filters, and we're going to add our study filter, which in this case is going to be that moving average crossover. You can see when you left click on the preset study, we have all these different options with different categories; if you're not sure exactly what study you would like to use, this kind of gives you the categories. So, we're going to go to crossover. We're going to choose our moving average crossover. And we're going to set our period minimum to 50. We're going to set our other period to 200. And we see that it already presets to crosses above based on the closing price. And then this is our time frame, so, we're looking at a daily time frame, you can go in here and change that. Generally, for this golden cross signal, traders are going to be looking at the daily time frame. So, we have our scan built out. We're going to click on the Scan tab and we're going to see our results. So, it looks like we have about 14 results here. We'll take one example, Eagle Point EIC. We're just going to right click on that, send that to our chart, and take a look.

So, we already have it set up where the blue line is our 50-day moving average. The orange line is our 200-day moving average. So, looking at our results here, we want to zoom in on that specific section to make sure that the 50 is crossed above the 200. We're going to left click on our chart. We're going to drag it over to the right. We're going to let go and then we can see that that crossover did in fact happen today. So now we want to save the scan. We're going to go to the three lines on the top right in the middle left click on save scan query. We're going to give it some sort of name. We'll just call it test for now. And now we have our scan saved. So, if we ever want to reload the scan without having to build it out again, we would go back to those three lines, load scan query, go to personal, and this is where we see our test which we just saved.
Okay. So now we're going to reset our scan tab and jump into the next scan. So, for the second scan we want to be looking at stocks that have a high implied volatility. Implied volatility is going to measure how much a stock is fluctuating or the potential range that a stock may trade in, expressed as a percentage.

We're generally going to see higher implied volatility when there's uncertainty in the market. Maybe a major event coming up such as the Fed meetings or a company has earnings, that's also going to increase volatility going into those earnings. When volatility is high, traders can take advantage of this by selling options with a higher premium and vice versa if volatility is low, that's when someone might be looking to buy options with the expectation that volatility is going to increase.

First, since I'm looking for stocks I could trade options on, I want to limit my search to stocks that are optionable. So, I'll set up a scan and the All optionable filter. I also want to filter out stocks with relatively low prices, because the risk of options with lower priced underlyings may have less liquidity, meaning they tend to trade less frequently and possibly leading to wider bid/ask spreads. With that in mind, I'll set the last filter to 30.

For the same reasons of trying to avoid low liquidity, we want to scan for stocks with high volume. Let's set it for a volume of at least 5 million shares traded on the day. Last, like I said before, I want to filter for stocks with high implied volatility.

One way to measure that is the IV percentile, which tells you how high a stock's implied volatility is relative to its historical range. So, I'll add an IV percentile filter and set it between 70% as our minimum and 100% as our maximum, because that would put the stocks in the highest end of the volatility spectrum. So now we're going to hit scan to see our results.

And so now we can see here we have about 38 different results. We can show, let's say we had more than 50 results, we can click on this down arrow here, and we can show more. We can also sort in different ways based on our symbol or some different criteria, or ascending and descending. One thing I'd like to add here is going to be the implied volatility percentile column.

So, we want to click on the gear on the right here. Click on Customize. Search for IV Percentile. And we're going to add this as a column within our scan results. That way we can see by clicking on it you can see that little arrow changes whether it's ascending or descending and we can see based on our results these are the highest IB percentile stocks that meet our other criteria as well.
So, we're going to reset our scan tab now, and we're going to jump into our third scan. So, for the third scan we want to look at stocks that pay dividends. There's a lot of ways to do this scan. But one that we're going to look at today is we're going to start by scanning in all S&P 500 stocks.

And I would also like to intersect with, if we go to our public watchlist, 25+ Year Dividends. That's going to show us companies that are established that have been paying a dividend for 25 years plus and likely over that time, that dividend has been growing, which is always good to see when you're receiving dividends and it shows that the company is stable and paying out those dividends to investors.

So, the different criteria we're going to use for this scan when it comes to our filters is we're going to stick with our last filter. And let's go for a minimum of 20 this time. We're going to also add market cap. Again, we're trying to see those bigger, more established blue-chip companies. So, in our stock filter we're going to choose market cap. It is in millions. So, if we put in 300,000 here, that's going to represent 300 billion. And then we can delete our extra stock filter. And we want to add a fundamental filter this time. That's going to be good for these dividend type of scans because it's really going to represent those fundamentals of the company. The balance sheet, more of those numbers when it comes down to income, revenue, things of that nature.

So, in this case we're going to look for our dividend yield filter. Dividend yield is a ratio calculated by dividing the annual dividend payment by the price of the company's stock. It's represented as a percentage and can give a sense of how dividend stocks stack up against one another. A common good dividend yield for these stocks is going to be about 2 to 6%. Not too high, not too low. 
So, let's hit scan and see what results we have. Looks like we have about five results here. Pretty established companies, which is what we were going for. Coca-Cola. Johnson & Johnson. Procter & Gamble. Those are companies that are known for paying a dividend. So, it makes sense that they would show up on this list.

So, we have our dividend yield filter in here. This graphical representation in the middle is going to show you where those scan results are. So, you can always use these sliders to move the minimum and the maximum to kind of get an idea of where we're going to see the most results. So, we're going to click Scan here. See our results. So, let's say we want to see what type of dividend Johnson & Johnson is currently paying. So, let's right click. And we're going to send this to our Trade tab with a red one.

And we can see Johnson & Johnson is within our Trade tab now. Within our underlying section, we can left click on this arrow. And we can see that it's currently paying $1.24 for their Dividend. And our Dividend Frequency is quarterly. So going back to the Scan tab here that wraps up our dividend scan. So, we're just going to reset this.

There is something else I'd like to show you. Now we want to go back and look at the scan that we saved. So, we're going to click on the three lines in the middle here. Go to load scan query. Looks like I named it test, let's change it to something else so we know what it is when we're bringing it up.

So, let's do the golden cross. Let's go back in and let's load up that scan and let's see what our results are. So, it looks like we have 14 results. So, we want to have this dynamically update for us. So, what we can do in these three lines here, we can either save it as a watchlist which isn't going to change. Or we can save it so that it alerts us one scan results change. So, if we go in here we can do it so either a symbol is added removed or a symbol is added or removed, going off of our scan titled the golden cross and create that. One nice thing about this, we said that we don't want to be sitting here all day, but whether we come back in a month, in a year, it's still going to be updating for us showing us what now fits that criteria.

This is nice if you're a fan of these scans and you want to build a few of these out, then it will automatically monitor them for you and let you know as these results are changing. 
Today we looked at three different scans and showed you how to save them as a dynamic watchlist. The stock hacker is a useful tool for any kind of trader.

It's customizable, so we encourage you to go in, play around, and find out what works best for you. Remember, we're always a phone call away if you need some help. Thanks for watching. Be sure to follow us for more thinkorswim demos and educational videos.

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