Option Selling Algorithms
Overview
Trade Desk comes with a complete interface allowing you to define and operate your own option selling algorithm. It can help you more easily create orders for selling stock options generally following one of three strategies: Selling Cash-Secured Puts (or naked put options), Selling Covered Call Options, or operating the Wheel Strategy (where you sell both put and call options in an alternating fashion after assignment).
Frequently Asked Questions
What is the minimum amount I can trade with?
Option contracts represent 100 shares. For example, let's say you choose HBI trading at $10.50. Then you need to give the algorithm at least $1,050 in buying power so that it can sell 1 put option. In this minimum case, you will likely submit an order once every few weeks.
Will this trigger PDT on my account?
No. Generally speaking, but it could theoretically happen though, especially if you change settings midday so it is something you should monitor through your trading platform.
Can I trade with Trade Desk Algorithms in the same account?
Yes. You can both be in the same account and you can restrict the capital allocated to your strategy so you can effectively operate two different strategies in the same account. Some things can happen like if you have configured to cancel open orders, then periodically it may cancel an order that you entered that took too long to execute. Another scenario that can happen is if you close a position that you have configured, then the position may be re-opened.
For what options level do I need approval?
You will need option level 2 approval, create single leg option orders. These will be done as covered calls and cash-secured puts.
What equities are supported?
Stocks and ETFs supported by your brokerage that have liquid options contracts. We have not tested and do not support more obscure equities such as Futures contracts and options on futures contracts.
How often does the algorithm run?
The algorithm checks your account multiple times per day. The exact schedule for your account will vary but it will check the market, your account and decide if it needs to create orders at least twice per hour during regular market hours.