Options Auto Trader selects expiration dates based on your strategy settings. This article explains how the system determines expiration dates for standard trades and calendar spreads.
Standard Expiration Date Selection
Retrieve Target DTE (Days to Expiration)
The system checks your strategy settings for the target DTE.
Example: A strategy set to 45 DTE aims for an option expiring closest to 45 days.
Query the Broker for Available Expirations
OptionsAutoTrader requests expiration dates from your broker.
Select the Closest Expiration
The system compares available expiration dates to the target DTE.
If the target DTE lands on the weekend, then the target DTE will updated to the upcoming Monday. Meaning if you are using a 1 DTE and the trade is executing on Friday, it will pick the target DTE to be the upcoming Monday.
Example: If 36, 43, and 50 DTE are available, the system selects 43 DTE (nearest to 45 DTE).
Calendar Spread Expiration Date Selection
A calendar spread involves different expiration dates for each leg of the trade.
Check for Short-Term Expirations (Less Than 7 Days)
If the target expiration is under 7 days, the system requires an exact match.
If no exact match exists, the trade fails.
Example: If targeting 1 DTE and 3 DTE but only 1 DTE and 4 DTE are available, the trade fails.
Check for Long-Term Expirations (More Than 7 Days)
If the target expiration is more than 7 days, the system selects the nearest available expiration.
Example: If targeting 45 DTE and 90 DTE:
Finds the nearest available 45 DTE (e.g., 43 DTE).
Finds the nearest available 90 DTE (e.g., exact 90 DTE).
Cautionary Notes
Ensure your broker provides accurate and up-to-date expiration dates.
Be aware that market conditions can affect availability and liquidity of expiration dates.
Double-check settings for calendar spreads to avoid trade failures due to mismatched expirations.
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