In Options Auto Trader, managing risk is crucial to a successful options trading strategy. One of the advanced exit rules you can implement is to automatically exit a trade when the short strike of your options position is hit. By default, this setting is turned off, but you can enable it to close trades when the underlying asset price reaches your short strike. This article will guide you through enabling this rule.
Step 1: Understanding the Short Strike Exit Rule
The short strike is the strike price of the option you sold in an options spread or short option strategy. If the underlying asset price reaches this level, it can signal a potential risk of assignment or increased loss. Enabling the Exit When the Short Strike is Hit rule ensures that the trade will automatically close once the asset price touches or crosses your short strike, helping to protect your capital.
Step 2: Access Advanced Exit Rules
To enable the short strike exit rule, follow these steps:
Log into your Options Auto Trader account.
Navigate to the Auto Trader page.
Click the gear icon next to the bot for which you want to enable this rule.
Scroll down to the Advanced Exit Rules section.
Step 3: Enable "Exit When the Short Strike Is Hit"
In the Advanced Exit Rules section:
Look for the option labeled "Exit When the Short Strike Is Hit."
By default, this setting is set to false, meaning the bot will not automatically exit trades when the underlying asset reaches the short strike.
To enable this feature, set the option to Yes by selecting the checkbox or toggling the switch.
Once enabled, the system will monitor your trades and exit the position automatically if the underlying asset hits or crosses the short strike price.
Step 4: Save Your Changes
After enabling the Exit When the Short Strike Is Hit rule:
Scroll to the bottom of the settings page.
Click Save to apply your changes.
Your auto trader will now automatically close trades when the underlying asset price reaches the short strike, helping to mitigate potential risk.
Step 5: Monitor Your Positions
Once this rule is activated, it’s important to monitor how your positions are performing and adjust your strategies as needed. While the auto trader will handle exits when the short strike is hit, keeping an eye on your overall strategy and risk management is essential for long-term success.
Conclusion
Setting the Exit When the Short Strike Is Hit rule in Options Auto Trader is a great way to add an additional layer of risk management to your options trading. By enabling this rule, you can protect your positions from large losses or assignment by automatically closing trades when the underlying asset price hits your short strike.
If you need any help setting up or adjusting this feature, feel free to reach out to our support team for assistance.
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