Automated scanning for entries and position monitoring for exits.
Hybrid, semi-automated strategy
Uses custom buttons and actions alongside bot automations.
Trade paper or real money
Try risk-free paper trading or connect your brokerage account to trade live.
Setup to trade the following strategies
Manages multiple ticker symbols
Trades a basket of tickers you choose to automate diversification
Focused trading in one ticker
Trades multiple positions in one ticker for targeted customization.
No coding required, 100% customizable
You can easily modify this bot template to fit your exact needs or trading style.
About this template
The strategic concept behind this bot, and as Kirk has told us from the beginning of the Bot transition, one of the key aspects of bots is to give us all time to Think and Strategize more and less time on the mundane of watching the market for specific entry conditions and then executing your trade. This bot is built with that “develop a strategy and then let the bot do its’s thing” mentality.
Achieving this bots planned entry is really only possible when volatilities are higher, but rather than taking the approach of measuring volatility (which will often lead to the entry I am looking for, but not always), I decided to keep the bot as simple as possible and just build the Scanner to simply look for the amount of credit I need to get an entry with no upside risk and a desired upside profit margin.
In the case of this specific 6/4 Broken Wing Iron Butterfly, I have to receive More than $4.00 in Credit for this to happen - so I have built a Minimum Credit Variable into this Scanner Automation and I have defaulted it to $4.25 - but note that any price over $4.00 will result in no upside risk (excluding the price of commissions). Also note that the higher you go over $4.00, the less likely you are to get a fill (the longer it could take to hit the right conditions), so it is a balancing act for sure and you should experiment with different numbers.
This bot was conceptualized on SPY because it is highly liquid, has a lot of $1 wide strikes and does not have built in volatility events like an earnings report which can often spike IV’s prior to earnings and while this bot would likely get you the desired credit prior to a stocks earnings, trading and holding positions over earnings carries it’s own inherent risks - so if you try this bot on stock, keep these factors in mind. Keep in mind however that SPY and other ETF's can and do have binary volatility events like FOMC meetings, elections, etc.
Possible concepts to experiment with once you clone this concept bot:
You may want to lay in multiple scanners, but vary/scale up your required “Credit Threshold” moving it up for each successive entry. This could build out a set of IB’s at different price points with escalating credit received each step of the way.
As mentioned above, trading stock around earnings has it’s own set of risks, but if you have a feeling that the given stock will remain neutral or only have a minor drop after earnings, but could explode to the upside, this trade “may” be one to play with, but make sure that your premise on the stock matches the neutral to bullish build of this bot. The normally expected drop in IV after earnings can provide fast returns IF the price action remains neutral to bullish after the earnings announcement.
You may want to experiment with a 60/50, 50/30 or any other type of butterfly configuration to see what that might give you as well. Of course if you do, you will need to change your desired credit accordingly, so model and study these fly's to know what might work best to get "No risk to the upside" Fly is that is your goal.
If you have your own index, ETF or stock you would like to try this concept on, you may need to adjust your wing widths to accommodate a higher priced stock like TSLA, GOOGL, AMZN, etc., but if you do, just start with the general 6/4 ratio - but of course you can experiment and vary things from there.
Experiment with Longer DTE’s. I built this around short DTE time frames because Theta Decay is faster at this point in an options cycle, but Gamma is also higher meaning that P&L swings can happen faster and more violently than they might happen with a longer DTE.
Possibly instituting a downside Stop or adjustment plan of some type as this current model does carry the full downside risk should a large tanking happen.
Below are the two images I used in the video if you want to check them out closer. The top one is an entry of a 6/4 BWB Iron Fly in lower to normal IV and the lower in is the exact same trade entered when IV was at a more elevated state.
After you study these - please feel free to fire back any thoughts or ideas and let me know how you might consider building off of this strategic concept and we call all work to Bigger, Better, Badder BWB Bot
This is a concept bot that is designed to enter Iron Butterfly trades only when conditions are right to allow for entry into a 6pt x 4pt Broken Wing Butterfly with no upside risk!
Learn more about the options strategies this template could trade: