About this template
Trendy Ideas is the result of an effort to layer trend and technical filters on top of Trade Ideas to find longer term, sustainable short put spread strategies. I've been running multiple versions of this bot on paper for a couple of weeks now, scanning across about 130 of the tickers supported by Trade Ideas. For each ticker, the bot looks for an uptrend, using RSI as a check for overbought conditions. If a ticker meets these criteria, the bot filters out anything outside my position size and probability parameters. The bot then uses Alpha value to rank all remaining opportunities for each ticker and enters the one with the highest value.
Since I’ve been using multiple bots, I’ve cohorted tickers by economic sector, at least for now. I don’t expect the bots will open positions on all these tickers, and I may group some of these sectors together as time goes on. After the FOMC meeting ends, I plan on starting up live versions in at least three sectors (probably tech, finance, and healthcare). The attached template version includes a diverse group of (relatively) uncorrelated stocks that have persistently opened positions on paper so far in my tests.
The template bot is optimized to open positions with spreads between $2 and $3 wide. The “Open Trade Idea” automation doesn’t have a recipe for strike width. Instead, the entry criteria that seem to do this work are the max profit/max loss inputs and the risk/reward input. I created a cheat sheet to help me remember the inputs necessary to target these strike widths. For example, for $2-$3 strike widths and a 25% return on risk, I would use the boxes highlighted in the table below.
There are tradeoffs involved in giving the bot the ability to open positions with variable strike widths, but it gives the bot more options to scan for the highest Alpha value. Ultimately it’s a strategic call. If you clone this bot and want to adjust the range of potential strike widths (or set it to only open a fixed strike width), change these three entry criteria in each of the “Open Trade Idea” automations. (Also remember to change the position size and, if you run the hedge automation, change those criteria there as well.) And you are welcome to use my cheat sheet - I've stored it here in Google Docs. The second tab has my position sizing reference, and the first tab lists all the tickers currently supported by Trade Ideas, their economic sector, and how I’ve cohorted them.
I know there will be long periods when the trend filters keep this bot from trading short put spreads. I’ve backtested various other strategies for the bot to use during these downtrends. So far, I haven’t found anything that works consistently, but I will keep testing and update this template as needed. The monitor and hedge automations are already set up to manage some other types of positions. And I’m open to any ideas about this (or any other input about the bot).
If you’ve made it this far without dying from boredom, see the bot notes for the fine print about the bot’s functions.