Final Price Settings
This video goes into detail about Final Price settings and how they work in conjunction with SmartPricing.
SmartPricing and Final Price settings are customizable and can be used for all order actions in any automation type.
How to Set Final Pricing (:19)
Using the same bot as the SmartPricing video, you can see the Final Price settings in the SmartPricing section of the open position action.
Remember, there are four SmartPricing settings:
The default setting for Final Price is always 100% of the bid-ask spread. You can manually input the range for any value between 50%-100%. You can also set the value as a dollar amount. The values can be edited at any time and can be customized for every order action.
For example, if you input 50% of the bid-ask spread as your Final Price setting, SmartPricing automatically stops at the midpoint of the spread. If you are using the Normal price setting, it may only check two prices instead of four, because you told SmartPricing to stop at the mid price.
At 100%, SmartPricing works through the entire bid-ask spread to fill an order. This doesn’t necessarily mean you’ll go through the entire spread; an order will be filled at a better price if possible.
For example, if you input a price of $1.50, SmartPricing does not look for prices above or below that value. It will try to fill at a better price first, but will not go beyond your Final Price. This is similar to a limit order, but you have the added benefit of trying better prices.
Close Position Actions (4:54)
SmartPricing and Final Price functionality is the same when exiting positions, with one addition.
There is a third field that can be used for closing orders.
Final Price can use a math operator based on the position’s opening trade price. The bots intelligently reference the original opening order execution details.
You can use a value to modify the position’s opening entry price to arrive at a final price limit to use for closing.
A x 1.15 multiplier would close the trade with a 15% or better profit for a debit type trade.
A + 2.50 addition would close the trade with $250 or better profit per contract for a debit type trade.
A x 0.50 multiplier would close the trade with a 50% or better profit for a credit type trade.
A - 0.75 offset to the position’s opening price would close the trade with a $75 or better profit per contract for a credit type trade.
For example, this close position action will close the trade with a 50% or better profit.
So, in this example, SmartPricing would use the Patient setting to try 5 different prices in 20 second intervals. The final price is the original credit received, multiplied by 50% (a 50% profit target). This allows SmartPricing to try for better pricing than 50%, but it will never submit an order for less than 50% profit.
If you want to set a specific dollar value for the position, you could use the subtraction feature to set the final price at the original order price, minus $0.25, thus creating a $25 profit per contract.
Therefore, SmartPricing’s final price would always be $0.25 below the opening order entry for this close position action. As always, you can edit your settings at any time.
Live Trading Example (7:23)
This live trade example demonstrates how SmartPricing works in conjunction with your brokerage account and how the Final Price settings work inside different order types.
This example looks to open a long call in XLF at the 0.40 delta strike price 30 days from expiration.
You can see in the option chain that the bid-ask spread for the ~ 0.40 delta XLF call, 31 DTE, is $0.04 wide, between $0.66-$0.62.
The Normal setting is used, with a Final Price of $0.65, just above the mid-price.
You can click on the order to view the details. Note that SmartPricing started at $0.63 and was not filled. Ten seconds later, it moved to $0.64 and was filled,before the final price setting.
The filled order is visible in the brokerage platform immediately, as is the canceled order that was not filled.
You can also use SmartPricing to manually close the position.
The patient SmartPricing setting is used, and the Final Price setting is set to close the position at no worse than $0.05 less than the original entry.
The bot will first attempt to close the position at the best possible price, but will automatically stop if it cannot close the position for at least $0.05 less than it was opened ($0.64 in this example).
You can see that SmartPricing starts at the estimated fill price of $0.62. It would not have tried a price below $0.59 (-$0.05 the open price).
The order is eventually filled at $0.61.
The canceled and filled orders are also visible in the brokerage account.
You can always turn SmartPricing off. When off, the automation does not use a price sequence.
By default, a limit order is set at 100% of the bid-ask spread, meaning you will accept the current bid (when selling) or ask price (when buying).
You can set the limit price, use a percentage of the bid-ask spread between 50-100%, or use the function to modify the position’s opening entry price.
When SmartPricing is turned off, the order will time out after five minutes.
For example, this order was set to exit the position at $0.10 above the entry price of $0.62. However, the estimated fill price at the time is only $0.61, so the order is not filled and is still listed as “working.”
Final Price settings can be used in automated or manual orders in the Option Alpha platform. They are a dynamic addition to any open or closing order action and can help you optimize your trade execution.
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When and why would I use the "Final Price" option for "Percent of Bid-Ask Spread?"
This features optimizes pricing by allowing SmartPricing to "walk" the bid-ask spread in an effort to fill a trade at a better price than the market price.
When and why would I use the "Final Price" option of "Position trade price(x,+,-,/)?"
This feature gives you the ability to submit a closing order that is a mathematical function of the entry trade price.
For example, a long option profits when the exit price is higher than the entry price. So, the “+” function tells the bot to close the position above the entry price by a defined value. +$1.00 would exit the position $1 higher than the opening price.
When and why would I use the "Final Price" option of a "Fixed Dollar Amount?"
This function is similar to a limit order. Your trade will fill at the price specified by the "Fixed Dollar Amount". Limit orders may be more difficult to fill, but they may result in better pricing.
Why would I use "Percent of Bid/Ask Spread" instead of "Fixed Dollar Amount?"
You could use "Percent of Bid/Ask Spread" when you want to "walk" the bid-ask spread to try and get a better fill. "Percent of Bid/Ask Spread" attempts to optimize available prices and fill your order at the best price.
The "Fixed Dollar Amount" final price effectively places a limit order. It will fill if and only if the price is available.
Why is "Position Trade Price (x, +, -, /)" not available for opening orders?
The "Position Trade Price" references a position’s entry price. An opening order does not have a price to reference, so the function is not available.