How to Filter Trade Opportunities for a Minimum Rate of Return

Learn how to use the rate of return opportunity recipe to automatically filter trades before sending an order to you broker.
Kirk Du Plessis
Mar 25, 2021

Identifying your desired minimum rate of return is a great prerequisite when entering an options position and is a sensible risk management tool when evaluating opportunities. Before automation, manually calculating the rate of return was a tedious and time-consuming process, especially if you have a robust portfolio. Now the bots do all the work for you.

This video shows you how to filter trade opportunities for a minimum rate of return before an order is sent to your broker. Bots check live market data to make these decisions based on your preferred criteria.

The opportunity return expectations decision recipe pulls data from the market and calculates the rate of return based on the premium collected in current market conditions. For example, if you want to filter for a 25% return on a $5 wide spread, the bot will check if the credit received is at least $1.00 ($1 / $4 = 25%). If the credit received is less than $1.00, the bot will not enter the position, and the automation will end. The bot will then check market pricing at the next scheduled interval. 

Simply precede an open position action in the automation with the decision recipe, and you can set up your minimum rate of return for all positions in the bot. This ensures you’re getting paid enough premium based on the amount of risk you’re willing to accept. You can easily test the automation to see if current market conditions would yield the position’s required premium.

Although it is not required to add this feature to an automation, we highly recommend filtering for rate of return and be confident that the trade meets all of your criteria before you enter a position. This allows you to let the bot run and continuously check every time to see if the pricing is above your threshold at any point, and if it is, it will send the order to your broker.

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