How do I Choose the Best Derivatives Software?

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  • Written By: Dana DeCecco
  • Edited By: A. Joseph
  • Last Modified Date: 07 December 2019
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For the retail investor, derivatives software is provided in the form of futures and options software. Programs are widely varied and can be related to analysis, strategy and market research. Derivatives are based on the performance of an underlying asset, so software programs related to stocks and commodities might also be useful. Traders searching for the best derivatives software must decide which assets will be traded and whether futures or options will be the financial instrument used.

The initial investment capital needed to trade futures might exceed the capital requirements for option trading. Futures contracts usually deal in large quantities of commodities although mini and micro contracts available on some commodities. Options on futures are also available, but these contracts are comparatively expensive. Options on stocks, indexes and exchange-traded funds (ETFs) might be a more economical choice for the retail investor.

Derivatives software for futures might include spread trading software. The software might track historical performance of spreads or detect current spread trading opportunities. The best pre-configured spreads and many spread trading systems are accessible online. Futures software developed for trading the Commitment of Traders (COT) reports research and analyze these reports and provide appropriate trading systems.


Futures trading software programs might be geared toward charting and tracking of commodities. Commodities are the underlying assets of futures contracts. Derivatives software for futures can chart, analyze and possibly forecast the future price movements of commodities. The best software products use accurate data feeds and employ the most advanced indicators available.

Online options trading software is provided by options brokers and independent third-party vendors. Some programs specialize in finding current opportunities, and others concentrate on strategy development. A few derivatives software programs might be a total package solution. Most option brokers provide software at no charge to their clients, and many of these derivatives software packages are superior to programs that must be purchased.

Options trading requires specialized software to determine whether the options are fairly priced. The best derivatives software will include a theoretical pricing model. Many option brokers offer software that indicates the best option strategy to use under various circumstances. The strategy selected can then be viewed in a program that calculates various outcomes and probabilities. Forecasted profit/loss graphs can be viewed on the better programs.

Some software programs are better than others at specific tasks. The investor might elect to use different programs to accomplish different tasks. For example, the options broker might provide superior options chains and analysis of the Greeks, but the graphical interface may not be up to par. In this case, the options trader might want to employ the services of a third party.

Some derivatives software programs are very expensive, and some are free. The cost of the program might not relate to the value of the software. The trader should investigate the software that is available and applicable to the assets and derivatives being traded. Entering the field of derivatives trading without the aid of quality derivatives software is not advisable.

Institutional-grade software provided for the valuation and management of derivatives is also available. This type of software provides a comprehensive solution for trading very basic to the most complex derivatives. These programs are very technical and expensive, putting them out of reach for the average retail investor. This kind of software is provided mainly for banks and financial advisors.


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