Automate Your Option Strategies with Strategy Bot

What is Strategy Bot?

Strategy Bot is an automated multi-leg trading tool that simplifies the creation and execution of options strategies. It allows traders to add multiple option contracts and set specific entry and exit conditions based on price or time for each strategy.

This tool uses the combined Last Traded Price (LTP) of all the contracts in a strategy, known as Strategy LTP, to trigger trades. Once the predefined conditions are met, the orders are automatically sent to the exchange, reducing the need for manual monitoring and quick decision-making.

How Does Strategy Bot Work?

Let’s break it down with a couple of examples:

Example 1: Buy Orders

Suppose you add:

• 1 lot of Nifty 25000 CE (Call Option) with an LTP of 100
• 1 lot of Nifty 25000 PE (Put Option) with an LTP of 50

The combined Strategy LTP becomes -150 (100+50 = 150. Since it's a combination of buying both calls and puts)

You set the following conditions:

• Entry condition: When the Strategy LTP hits -100
• Exit condition: Book profit of 75 points, and Book loss of 50 points

Once the Strategy LTP reaches -100, the orders are sent to the exchange, and the strategy enters the market. After entry, if the Strategy LTP drops by 50 points (Strategy LTP = -50) or rises by 75 points (Strategy LTP = -175), the bot will automatically execute either a stop-loss or a book-profit order.

Example 2: Sell Orders

In a similar way, for sell orders:

• The user adds 1 lot of Nifty 25000 CE (LTP 100) and 1 lot of Nifty 25000 PE (LTP 50)
• The combined Strategy LTP becomes 150

You set the below conditions:

• Entry condition: Trigger at 200
• Exit condition: Book profit of 100 points, and Book Loss of 50 points.

Once the Strategy LTP reaches 200, the orders are sent to the exchange, and the strategy enters the market. After entry, if the Strategy LTP drops by 100 points (Strategy LTP = 100) or rises by 50 points (Strategy LTP = 250), the bot will automatically execute either a stop-loss or a book-profit order.

Why Use Strategy Bot?

1. Automated Entry and Exit Execution Strategy Bot allows traders to automate the process of entering and exiting strategies by setting predefined conditions. This helps traders avoid missing key moments in the market and reduces the need for manual intervention, freeing them up to focus on other opportunities.

2. Risk Management With Strategy Bot, traders can easily manage risk by setting book profit and stop-loss conditions based on the points from the average entry or the profit and loss levels they can tolerate. This ensures that traders don't miss out on profits or incur unexpected losses. Additionally, traders can set a global exit for all open strategies, allowing them to exit when their overall Strategy Bot profit and loss (PnL) meets the desired thresholds.

3. Strategy LTP-Based Execution The combined Strategy LTP drives the execution, which simplifies strategy management. Instead of setting entry or exit prices for each individual leg of the options contracts, traders can rely on the Strategy LTP to trigger the execution of orders. This makes it easier to manage multiple-leg strategies.

How to use Strategy Bot?

1. Accessing Strategy Bot:

• Log in to the Kotak Neo app and web.
• Navigate to the FnO homepage.
• Click on “Strategy Bot” to access the feature.

2. Add legs from option chain

• Select the underlying asset you wish to trade from the dropdown menu.
• Hover over the desired strike prices and click ‘B’ for Buy or ‘S’ for Sell. The selected legs will be added to your strategy.

3. Name the Strategy

• You can rename your strategy as per your preference (e.g., "Nifty Straddle").
• By default, strategies will be named "Strategy 1," "Strategy 2," etc.
• Ensure each strategy has a unique name, as duplicates are not allowed.

4. Set Entry parameters

• Define your entry parameters based on Price or Time.
• For Price-based entries, choose between Market or Limit orders.
• Once the specified entry conditions are met, the order will be sent to the exchange.
• Note : All entry and exit orders are placed as limit orders with a default Minimum Price Protection (MPP) of ₹0.50 or 5%, whichever is higher.

5. Set Exit parameters:

• Define your exit conditions using either Points or Rupees for Book. Profit and Stop Loss, or specify an Exit Time.
• If you input values in Points, the system will auto-calculate the equivalent Rupee amount, and vice versa.
• For Exit Time, you can schedule a specific date and time to close your strategy.

6. Start or Save the Strategy:

• After setting your entry and exit parameters, click “Start Strategy” to activate it, or click “Save” to save it for later.
• You can start saved strategies from the “Save” tab.
• Once started, the strategy becomes active and the system will track your defined entry and exit conditions. When triggered, the orders will be sent to the exchange.
• You can monitor active strategies under the “Positions” tab and pause them if needed.
• Note : All active strategies are paused at the start of the next trading day. To resume, restart them from the “Positions” tab.

7. Set global exit:

• You can set a Global Exit for all your open strategies based on overall PnL or Time, which will be applicable for the same day.
• If any global exit conditions are met, all open strategies will be closed, and the global exit will be reset.
• Global Exit conditions override the individual entry and exit conditions for each strategy.
• Note : Global exit is disabled at the end of each trading day. You can reset the targets after 7:30 AM.

Disclosure:

Kotak securities, at all times, bears no liability towards you for any reason whatsoever with respect to using the Strategy Bot feature; including but not limited to, non-execution of any order using the Strategy Bot feature / either leg of the order, any opportunity loss for non-execution of such orders/trades, any cancellation or non-placement of any orders, and any such other claims which may arise from you with respect to using the Strategy Bot feature.