Algorithmic Options Trading, Part 2

In this second part of the Algorithmic Options trading series we’ll look more closely into option returns. Especially into combining different option types for getting user-tailored profit and risk curves. Option traders know combinations with funny names like “Iron Condor” or “Butterfly”, but you’re not limited to them. With some tricks you can create artificial financial instruments of any desired property – for instance “Binary Options” with more than 100% payout factor. Continue reading “Algorithmic Options Trading, Part 2”

Algorithmic Options Trading, Part 1

Despite the many interesting features of options, private traders rarely take advantage of them (of course I’m talking here of serious options, not binary options). Maybe options are unpopular due to their reputation of being complex. Or due to their lack of support by most trading software tools. Or due to the price tags of the few tools that support them and of the historical data that you need for algorithmic trading. Whatever – we recently did several programming contracts for options trading systems, and I was surprised that even simple systems seemed to produce relatively consistent profit. Especially selling options appears more lucrative than trading ‘conventional’ instruments. This article is the first one of a mini-series about earning money with algorithmic options trading.   Continue reading “Algorithmic Options Trading, Part 1”