Strategy Builder Interface
Understanding the AlgoTest Strategy Builder Interface​
Think of AlgoTest's option strategy builder as your personal options lab. It's a user-friendly interface that allows you to experiment with different option variations to create customized strategies. These strategies can be designed to achieve various goals, such as profiting from a bullish or bearish market outlook, limiting risk, or generating income.
Here's a breakdown of what you typically find in our strategy builder interface:
Underlying Security Selection​
Choose the index in the strategy builder you want to trade options on.
Expiry Date Selection​
Choose the expiration date for your option contracts.
Strike Price Selection​
Select the strike price at which you want to buy or sell the underlying security.
Option Type Selection​
Pick between calls or put options based on your market outlook.
Position Type Selection​
Pick buy or sell based on your market outlook.
Quantity Input​
Specify the number of option contracts you want to include in your strategy.
Strategy Analysis​
The builder will often visually represent your chosen options strategy, including a payoff chart that shows potential profits and losses at different underlying security prices. This chart displays your potential maximum profit (how much you could gain if the market moves exactly as you predict) and maximum loss (the most you could lose in case the market goes against your view) and much more information about your strategy that can help you to fine-tune your strategy.
Greeks Analysis​
The Greeks analysis helps you assess how your strategy responds to changes in the underlying price, implied volatility and time to expiry.
By experimenting with these features, you can explore different option combinations and see how they perform under various market scenarios. This experimentation is crucial for developing your options trading skills and making sound decisions.
Why Are Gamma, Vega and Theta the Same for Calls and Puts?
For the same underlying, strike price and expiry, AlgoTest calculates matching Gamma, Vega and Theta using a shared IV and Black-Scholes calculations with interest-rate and dividend-yield inputs set to zero. Delta differs between calls and puts. These matching values describe the individual options before position adjustments.
Your strategy's Greek exposure also depends on quantities and whether each leg is bought or sold. Selling an option reverses its Greek exposure compared with buying it.