Credit Spreads in Algostra
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Suppose I want to Enter a Credit Spread Strategy based on the Option Strikes Indicator level (Not the underlying Nifty), how to do that?
For example: Nifty is at 26000 and I want to enter a Bull Put Strategy with strikes say SELL 25800 PE and BUY 25300 PE.
Entry condition : Price of 25800 PE < Simple Moving Average (30)
Exit Condition : Price of 25800 PE > Simple Moving Average (30)
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To formally address this requirement within the Algostra framework, it is important to understand the technical architecture regarding indicator placement and strike selection.
In Algostra, the system logic is fundamentally built around the At-The-Money (ATM) strike. Because the ATM is recalibrated every 5 minutes, the platform operates on a dynamic basis, shifting its focus to match the current market spot price.Core Logic Constraints
No OTM Anchoring: You cannot anchor an indicator (such as a Simple Moving Average) to an Out-of-the-Money (OTM) strike like the 25800 PE. The system does not track the technical price action of specific OTM strikes for the purpose of triggering an entry or exit.
ATM-Based Technicals: The platform anchors its technical analysis exclusively to the ATM level. The system monitors the price action and indicators (SMA, RSI, etc.) of the current ATM strike to determine if your entry or exit conditions are met.
Execution Flexibility: While the trigger is anchored to the ATM, the execution is flexible. Based on the price action of the ATM, you can instruct the system to execute a trade on any strikes of your choice—whether defined by a specific Delta, a certain Premium value, or a fixed Distance from the ATM.
Recommended Workflow:
To achieve your Bull Put Strategy, you would structure the logic as follows:
- Monitor the ATM: Set your condition to track if the ATM Price < SMA (30).
- Dynamic Execution: Once the ATM satisfies this condition during its 5-minute recalibration check, the system will then identify and sell the strike you have specified (e.g., the strike 200 points away from that current ATM).
- Exit Protocol: Similarly, the exit will be triggered when the ATM Price > SMA (30), regardless of which OTM strike you are currently holding.
Summary: You watch the ATM for the signal, but you execute on the OTM for the strategy.
We will take this as a requirement and forward it to the Product team.
