Comparing Profit Target to Trailing Value

Comparing profit target to trailing value uses the SmartStops feature to trail a position after a target is reached.

The SmartStop is an intelligent trailing stop loss for options positions. It tracks the position's percentage gain every market minute. If the target percentage is breached, SmartStop will additionally track the position's highest gain percentage every market minute. On every automation interval, it will evaluate if the current percentage gain differs from the high gain by more than the given Trail percentage points. If so, the automation will follow the Yes path.

A bot tracks the P/L fluctuations between automation intervals. However, triggers will only occur during an automation execution on the next interval. A bot does not act upon collected information until an automation is run.

Example 1

Assume a new position was opened at 09:45 AM. At 10:00 (and every interval thereafter) when a SmartStop automation runs, the bot asks:

  1. What's the highest known % gain for this position?
  2. Is it greater than the profit target?
  3. How much are we currently trailing that number by?
  4. Is our current trail greater than the trailing target?

If these conditions 2 and 4 are true, the SmartStop will return true and follow the Yes path.

For example, let's say you receive 2.00 in premium and set your SmartStop target at 50% and the trailing % to 10 percentage points. If the position's value met the target of 50% profit, or 1.00, it would then trigger the trail of 10% and rest at 40%, or 1.20. Now active, the trailing stop will continue to track the high gain (i.e., question 1 above) every market minute until either a target or stop condition is met (i.e., question 4 above) upon execution of the automation.

As shown below, the Target is set to 50%, which means the Trail was activated once the position's gain crossed that threshold. The SmartStop is triggered when the percentage gain is 10 percentage points below the Position high gain of 50%.

Example 2

Described another way, let's define the following variables:

At every 15 min interval, if:

  1. High gain is less than target, follow No path
  2. If high gain greater than or equal to target and trailing points is less than trigger, follow No path
  3. If high gain greater than or equal to target and trailing points is greater than or equal to trigger, follow Yes path

Assume position opened at 9:45 AM ET with trailing target = 50% and trigger = 5%. Then, at some arbitrary date and time in the future:

  1. What's the highest known % gain for this position? 52%
  2. Is it greater than the user's profit target? Yes, profit target was 50%
  3. How much are we currently trailing that number by? 7 percentage points
  4. Is our current trail greater than the user's trigger value? Yes, 7 > 5

Therefore, the high gain is greater than or equal to target and trailing points is greater than or equal to trigger, follow Yes path.

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