Bots
Entry Conditions

Strike Selection

For strike selection, you need to specify which option chain to use (by Days to Expiration) and then which strike(s) in that chain to select.

Chain (Days to Expiration)

Target Days to Expiration

When it's time to enter a new position, your bot will look at the current option chain and select a strike that is closest to this number of days to expiration. You can optionally specify minimum and maximum values for days to expiration as well.

When bots search for an expiration date, they'll take the closest match to your target. If there is no exact match, it'll take the next closest within your min and max days to expiration. If there are two neighboring expirations that are the same distance from your target, the bot will select the nearest expiration.

Strike Price

Primary Strike

For the primary strike (short strike on a credit position or long strike on a debit position), you can select strike price either by Delta or by Premium.

Target Delta

Your bot will look at the current option chain and select a strike that is closest to this target delta. You can optionally specify minimum and maximum values for delta well.

If you're dealing with a spread or a condor, this target delta value only applies to the primary strike (short strike of a credit spread or long strike of a debit spread). Your target is delta for just that one strike and not the net delta for the full spread.

Target Premium

Your bot will look at the current option chain and select a strike that is closest to this target premium. You can optionally specify minimum and maximum values for premium well.

If you're dealing with a spread or a condor, this target premium value only applies to the primary strike (short strike of a credit spread or long strike of a debit spread). Your target is premium for just that one strike and not the net premium for the full spread.

Target % OTM (out-of-the-money)

Your bot will look at the current option chain and select a strike that is closest to this target percentage out-of-the-money (OTM). You can optionally specify minimum and maximum values for % OTM well.

% OTM is calculated based on percentage distance that each strike is from the current underlying price.

If you're dealing with a spread or a condor, this target % OTM only applies to the primary strike (short strike of a credit spread or long strike of a debit spread). % OTM is used to determine those strikes that are closest, and then spread width settings below will determine the other strike(s).

Secondary Strike (spread strike)

For any bot that contains a spread (credit/debit spreads, condors, butterflies), you'll need to tell the bot how to select a strike for that side of the spread. You can establish spread width by delta, points, percent, or premium.

Delta

Provide your desired delta for the spread strike, and the bot will select the strike closest to that delta value.

Points

Provide your desired spread width, and the bot will select a spread strike that is closest to this width.

Percent

Provide your desired spread width by percent, and the bot will select a spread strike that is closest to this percentage wide. For example, if running a Put Credit Spread with a short strike at 100, and you'd like your spread to be 5% wide, the bot will select a strike that is closest to 95 for the long strike. This is 5% below 100.

Premium

Provide a target price for the spread strike. The bot will search the option chain and select the first strike with a mid price that meets your target price. The bot can't guarantee a fill at your target price but will just select a strike with your target price at the mid. If you just want the cheapest strike in the chain, you can enter $0.00 into the target premium field. The bot will select the closest strike with the lowest bid-ask spread. You can optionally specify a minimum and/or maximum width (by points or percent) to control the size of your variable width.

If you have a target price for the spread strike and that strike is outside of the minimum or maximum width that you provide, then the bot will select the strike at the minimum or maximum width even if that strike does not meet your target price.

Smart Spread Width (for Spreads that target Delta, Points, or Percent)

When you are running a position with a spread that uses delta, points, or percent to select the spread strike, you can optionally enable Smart Spread Width to automatically narrow or widen your spread as appropriate, without impacting the trade price.

Credit Spreads

Smart Spread Width will try to make credit spreads narrower without impacting trade price to reduce your overall risk on the trade without reducing credit received at entry. The bot can do this if, after selecting a spread strike, it sees another strike closer to the money for the same price (based on delta, points, or percent).

Variable Spread Widths Means Variable Risk for Credit Spreads

If you use Smart Spread Widths on a credit position, your spread width can change from trade to trade, thus changing your max risk per contract, per position. With this in mind, you may wish to avoid the "Percent of Portfolio" allocation, because your contract quantity can change from trade to trade based on spread width. If you wish to maintain the same number of contracts per trade regardless of spread width, consider Fixed Quantity or Leverage Amount allocations instead of Percent of Portfolio.

Debit Spreads

Smart Spread Width will try to make debit spreads wider without impacting trade price to increase your profit potential on the trade without increasing your debit paid at entry. The bot can do this if, after selecting a spread strike, it sees another strike farther from the money for the same price as the target strike (based on delta, points, or percent).

Smart Spread Width Example: Credit Spread

For a visual example of Smart Spread Widths in action on a put credit spread, consider the following example that targets a 100-wide credit spread. This initially has the spread strike (long strike in this case) at 4235. However, the bot can move that strike to 4260, which has the same bid/ask. This will narrow the spread from the original 100-wide target to 65-wide, without changing the price of the trade. This reduces overall risk on the trade by 35% while maintaining the same reward.

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Updated 27 Mar 2024
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