About this template
The Falcon sells Short Put Spreads on a group of 10 tickers per bot (or up to 25 if your account is supercharged).
This bot was designed from the beginning to be more of a framework for anyone to quickly adjust to their own preferred settings, so custom inputs were used extensively. That said, the "as designed" strategy for this bot is as follows:
MANAGEMENT
Basic Strategy: Take Profit at 75% profit target. If there's a trend reversal, then take profits if any or close position if loss is at least 75% (don't tighten this, or you'll be closing out potential winners at a loss).
Details (at least more of them!):
– Pattern Day Trading protection is turned on/off by a switch. When PDT is not allowed, the monitor will not close a position the same day it was opened. Neither will the Scanner open a position in the same underlying on the same day a position was closed.
– Hedging is also turned on/off by a switch. When hedging is allowed (and all conditions line up!), a Short Call Spread will be opened with the same expiration and quantity as the challenged Short Put Spread. When choosing to allow hedging, the maximum number of positions that the scanner can open can be limited via an input in the bot settings to allow room for the monitor to open a hedge position if necessary.
– Hard Profit Target is set to 75%, but I still use a SmartStop and won't trigger the close until it has trailed by at least 0.5%.
– DTEs and (soft) Profit Targets are progressive. If a position is still >15DTE, profits will only be taken if it trails a 50% profit target by 15%. If the DTE is between 7 and 15, the SmartStop is set to 35%;5%. If the DTE is between 3 and 7 it is 15%;5%. Once DTE is below 3, the position will simply be closed unless the return in over 70% in which case it will go to expiration.
Here are the backtest results when these default parameters were run agains SPY (using OptionStack):
FWIW, I was sizing the trades at up to $1000 of risk and only 1 concurrent position.
My personal recommendation for this bot is to give it at least a $5k allocation.
