Automate Bot Decisions Using Option Greeks

Inside of this video, I want to show you how to automate bot decisions using option greeks. Now one of the cool things that you can do inside of your bot is you can reference the greeks for both existing positions and potential trading opportunities. I'll show you how to set this up in two different examples inside of this video.

The first example that I'm going to walk through here is using a monitor automation. So inside of this demo automation, I've set this up like a traditional monitor automation. I first use a repeater action to tell the bot to repeat through each of the positions that the bot has, then you can make whatever decisions or management criteria you want the bot to go through. In this case, we'll just use a very simple example like check and see if the position expires in less than five days.

The next thing that I want to do is I want to reference some of the option greeks. Maybe if I'm inside five days from expiration, I want to check some greek values for existing positions. That might tell me if my position is getting challenged or if the position needs to be closed or adjusted or profits to be taken early based on some of the greek readings.

In this case, I add another decision action, and I add some decision criteria. Here I'm going to go down to some of the position level data. Again, this is because I'm using this inside of a monitor automation, so I'm managing and monitoring existing positions. Here I can go to this recipe.

This recipe can pull the information from any of my existing positions and then reference the long, short, call, put leg of any of my existing positions. In this case, let's reference the short call leg of potentially a short call spread or an iron condor position. I can then check specific properties of that particular leg in a particular position. In this case, you can see that when I click on the properties value, I have some of the option greeks available as references that I can check inside of my bot.

I can check the delta or the gamma, the vega, or the theta value of that particular leg inside of my automation. In this case the one I want to check the delta value and check to see if the delta value is greater than 0.50. This would suggest maybe that my position is being challenged, and my short call leg is now starting to go into the money. Once I have all of my criteria set up, I can just simply hit save and add this decision to my automation editor.

Now when this monitor automation runs, it will check and see if each position expires in less than five days. And if it does expire in less than five days, check and see if the short call leg delta is greater than 0.50. If it is, we might want to take a different action like closing the position if we're getting challenged inside of 5 days. This all can be managed very easily and very simply by the bots inside of your platform.

But we don't have to end it there, we can actually continue to expand and check more delta values and option greeks inside of our bots by just simply adding groups or nest of decisions inside of our decision actions. Here we'll add another decision recipe to check and see if the position short put leg has a delta that is less than -0.50. So, in this case, we'll change all these modifiers to the short put leg delta, and the short put let delta being less than -0.50.

Again, because delta values are negative for puts and positive for calls, you'll just want to make sure that these are the right values. You can always test this inside of your automation as well when you've built these out and stress test your logic. Once you're good to go here, you can change these modifiers and again, if this is an iron condor automation that you're using, you can have the bot check and see if either the short call leg or the short put leg delta has gone above and below the 0.50 delta.

This would again suggest the positions getting challenged, and now you can check appropriate action. Again, this is all using the option greeks as decisions inside of your bots. Now let's clear this out here a little bit, and let's use these all four different scanner automations. So, the example that we had here, we were using these decision recipes when we were managing existing positions. but it doesn’t end there, you can use option greeks for potential trading opportunities as well.

So let's assume that we're now building out a demo automation to scan through potential trades and try to find trading opportunities. Here we can again use this opportunity filter which checks very similar properties to the ones that we have for our positions.

Now notice this time we're using an opportunity recipe, that’s because we don’t have an existing position for this demo scanner automation that we're building. So now, when I go here to add an opportunity, you're going to have to specify what type of trading opportunity you might want the bot to enter.  

Here we've selected a long call spread as our potential trading opportunity. We can set the symbol; we can set all the different criteria that we want the bot to pull in to check for our potential trading opportunity. In this case we're checking SPY for a 30 day expiration, a long call at 30 delta, and a short call at a 10 delta. Once we have all of these set up, we simply hit save. Now this opportunity is being pulled in to the automation, and now we can check the option greeks of any of the particular legs.

In this case, again, we can check the short or a long leg for our potential call spread opportunity. And now we can go over here to the potential opportunity properties and choose something like theta. We don’t really need to check the delta because we're doing that in the opportunity, but we might want to check the actual theta value of the short call leg specifically, or you can group and associate these decisions to check multiple greeks like we showed you earlier.

Here we're checking to see if the theta value is greater than, say, negative .05. Maybe that’s the threshold for theta for particular positions that we'd like to get into in this particular trading strategy. Once we're good to go, we simply hit save. That automation decision is now added to the automation editor. We can run a test and verify that it's working appropriately by just running this on a demo bot or a simple bot that we have inside of our account.

Notice that inside of this little quick test here, we can see that it is working appropriately and is meeting all the criteria that we have for entering this position. The long call spread; short call leg theta is greater than -.05. It's actually currently -0.03. So that meets our criteria for entering the position.

If we're good to go here, we can then add another action down the yes path to open a position. And it's going to reference that same existing position that we built out as an opportunity. We set our price, and our amount, and then we simply click save.

Notice that throughout this automation building that we've been doing for both scanners and monitors, we were able to use and reference option greeks, of not only existing positions in our account but also potential trading opportunities like we just showed you. This is a really cool and intelligent way to automate your decisions using any available greek inside of the platform.