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Advanced Features

AlgoTest Simulator offers advanced features that can elevate your trading to a new level. Trading is a zero-sum game, requiring you to outsmart other traders to make significant profits. AlgoTest Simulator provides advanced features that give you an edge over your counterparts.

AlgoTest Updates

Our team at AlgoTest is constantly innovating and trying to give you the best trading experience. In order to do so we take feedback, research, design, and develop products and updates as quickly as possible.

Bear Call Ladder

The Bear Call Ladder is an options strategy designed for traders who expect significant price volatility but are unsure of the direction. It involves three steps: selling one in-the-money (or near-the-money) call option and buying two out-of-the-money call options, generating an initial net credit. This strategy profits from a sharp price move upward while capping potential losses if the price remains within a certain range.

Bear Call Spread

The Bear Call Spread is a bearish options strategy used when a trader expects a moderate decline or limited upward movement in the underlying asset’s price. It involves selling a call option at a lower strike price and buying another call option at a higher strike price, both with the same expiration date. This setup generates a net credit, which is the maximum profit potential. The strategy limits both profit and loss, making it a relatively safe choice for bearish market conditions.

Bear Put Spread

The Bear Put Spread is a straightforward bearish options strategy for traders anticipating a moderate decline in the price of an underlying asset. It involves two key actions: buying a put option at a higher strike price and selling a put option at a lower strike price. Both options share the same expiration date, resulting in a cost-effective approach compared to buying a single put option.

Bull Call Spread

The Bull Call Spread strategy is ideal for traders with a moderately bullish outlook on an asset. It involves buying a call option at a lower strike price while simultaneously selling another call option at a higher strike price, both expiring on the same date. The premium collected from selling the higher strike call reduces the cost of purchasing the lower strike call, creating a cost-effective strategy. While this approach caps the maximum profit at the higher strike, it also limits the maximum loss to the net premium paid, balancing risk and reward.

Bull Put Spread

The Bull Put Spread is a conservative options strategy used when traders have a moderately bullish outlook on an asset. It involves selling a put option at a higher strike price and buying another put option at a lower strike price, both with the same expiration date. The goal is to collect a net credit while limiting potential losses. The premium received from selling the higher strike put is partially offset by the cost of the lower strike put, capping both the profit and the risk.

Call Ratio Back Spread

The Call Ratio Back Spread is a bullish options strategy used when a trader expects a significant upward move in the underlying asset. It involves selling one in-the-money (ITM) or near-the-money (ATM) call option and buying two out-of-the-money (OTM) call options. This strategy offers unlimited profit potential if the asset price rises sharply, while losses remain limited if the price stays flat or decreases.

Delta

Understanding Delta: The Option Greek

Error Handling

AlgoTest has a new feature called the Resume Strategy function to help you resume a strategy that has gone into error.

Error on AlgoTest?

While it is not the most common occurrence, sometimes the strategies you create can go into errors. In such situations, it is essential to maintain calm and follow the correct steps, to handle the error efficiently. This article will discuss how to receive error notifications, the steps to follow if your strategy encounters an error, and steps to prevent any future errors.

Gamma

Understanding Gamma: The Rate of Change in Delta

Introduction

Introduction to Option Chain and AlgoTest's Strategy Builder

Iron Condor

The Iron Condor is an advanced, market-neutral options strategy that profits from low volatility. It involves four options: selling an out-of-the-money call and an out-of-the-money put while simultaneously buying a further out-of-the-money call and put to limit potential losses. The strategy earns maximum profit if the underlying asset remains between the two middle strike prices at expiration. However, if the price moves outside this range, losses are capped.

Live Execution and Trade Management

Now that you've honed your skills in crafting options strategies using the builder, it's time to explore how to execute and manage your trades. This section will dig into live trading, order types and execution, trade execution features and position management tools.

Long and Short Strangle

The Long Strangle and Short Strangle strategies are options techniques used for trading based on expectations of significant price movement or stability.

Long Straddle

The Long Straddle is a market-neutral options strategy used when a trader expects significant price movement in either direction but is unsure about the direction itself. It involves buying both a call option and a put option on the same underlying asset, with identical strike prices and expiration dates. The strategy profits from large price swings in either direction, while the maximum loss is limited to the total premium paid if the asset remains range-bound.

Mastering Call and Put

Call and Put Options are essential tools for options traders, offering flexibility to profit from market movements.

Max Pain and Put Call Ratio

This chapter explains two essential tools for options trading analysis: Max Pain Theory and the Put-Call Ratio (PCR).

Playground

The "Playground" is a simulated trading environment offered by AlgoTest.

Put Ratio Back Spread

The Put Ratio Back Spread is a strategic options play used when you expect significant downward movement in the underlying asset but want to limit potential losses if the asset price increases. This strategy involves selling a lower number of put options at a higher strike price and buying a greater number of put options at a lower strike price. The result is often a net credit or minimal cost and offers the potential for substantial profit if the asset declines sharply, while limiting losses on an upward price move.

Running a Simulation

To start a simulation, go to the simulator section and click on the "Simulator" button, as depicted in the image below on AlgoTest.

Setting up Strategy Builder

Now that you're familiar with option chains and AlgoTest's Strategy Builder, let's have a piece of deeper information regarding the setup process.

Short Straddle

The Short Straddle is a neutral options strategy designed to profit from minimal price movement in the underlying asset. It involves selling both a call option and a put option at the same strike price and expiration date. The goal is to collect premiums and profit if the asset remains near the strike price. However, the risk becomes unlimited if the asset makes a significant move in either direction.

Theta

Theta – Understanding Time Decay

Vega

Vega: Sensitivity to Volatility in Options