You now have even more options to select strike prices in your automations! The new update gives you expanded selections for even more control when building an option position.
You can now choose specific option legs using “exactly,” “closest,” “higher,” or “lower” relative to another strike price or the underlying symbol’s price.
You can use a dollar amount, percentage, or even standard deviation for strike selection.
When using the “exactly” feature, the bot will reference the exact amount you input, allowing you to set up positions with precisely defined risk.Â
If there is no strike price available for the exact amount you select, the automation will end.
It is also important to note that referencing an exact dollar amount above or below an underlying symbol’s price will often result in no available strike price.
For example, if you want to use a strike price exactly $5.00 above the underlying symbol’s price, the stock would need to be a perfect round number at the time of the scan, such as $50. If the underlying is $50.27, there will be no strike price available because strike prices are quoted in round numbers.
You can also use an option’s delta when selecting strikes.
Remember that when referencing put options with a negative delta, the “or higher” selection means you are moving away from the money.
For example, if you select -0.20 delta or higher, and there is no -0.20 delta, the bot will use the next closest strike price to -0.20. In this example, the $90 strike price has an -0.18 delta, which is higher than -0.20 because it is closer to 0.
The recipe references deltas further out-of-the-money from the underlying’s price.Â
Think of “higher” as a larger spread width. If you select a delta of -0.20 or higher, the spread’s width will increase if the exact delta is not available.
So, if you set up a short put spread to open the position’s long leg at -0.20 delta or higher, and a -0.20 delta is not available, the bot will look for a lower strike price, thereby increasing the spread’s width between the short and long legs.
Conversely, if you are on the call side and select a delta that is “or lower,” it will round down in delta and up in price.
Finally, when using the “or closest” selection, the bot will automatically select the closest available option, regardless of direction.
In the example below, if you select -0.40 delta “or closest,” the bot will choose the -0.44 delta.
If there was a -0.38 delta available, the bot would select that strike price in this example.
We always encourage you to take your time with these new features and test automations to ensure you choose the correct strike prices for your options strategy. Once you are comfortable using these expanded strike selections, we’re confident you’ll love the added control and precision now available in your automations.
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