
# Strategy Templates Syntax

**Strategy templates** enable our users to design custom options spread templates.
These spread templates can then be applied to any option series using the **Spread desk**.

## Creating a strategy template

To open the strategy templates manager window, click on the strategy templates icon in the main menu.

![](strategytemplatebutton.png)
Figure: The new updated main menu

:::cut:::

The strategy templates window will appear on screen.
You will be greeted with a screen that has three sections.
The left hand column of the window has a list of templates names.
These can be changed in the upper right hand section.
If you wish to add more templates, simply click the cross in the top left hand of the window.

![](strategy_templates_manager.png)
Figure: The new strategy templates window

The upper middle and right hand portion of the window contains the template name and it’s formula.
The template text field contains the formula for creating a spread.
We have our own custom syntax for making spreads that I will explain in the paragraph below.
Directly below this section, there are five buttons allowing you to add copy save or delete a strategy, as well as cancel working with it.

Finally, the main portion of the window is comprised of the ‘preview’ – this is where the payoff function
of the spread which is build up according to the formula is previewed on the screen.
Note that the Base price and PnL axes are purely theoretical.

Anyhow, let us talk about the syntax involved in the template formula:

- **`c`** means call
- **`p`** means put
- **`,`** denotes a different option, either in type or strike price.

As a default, whenever a new strategy is created, it auto-populates the template formula with one call
and one put at the same strike price.
Consequently, you can see this reflected in the risk profile of the preview:

However, when you look at the template, you will note that there is a number to the left hand side of the `c` and `p`.
These numbers represent the quantity of options to be bought when the strategy is executed / modelled.
Try to change the quantities and see how the preview changes.
Also remember that negative quantities like `-1` are perfectly fine to use, and denote a short position.

As an example, if you simply put `-1c,-1p`, you will notice that the risk profile is inverted, to represent the changing risk profile.
Alternatively, if you put `2c,1p` you’ll note that the risk profile becomes lopsided at a ratio of `2:1`.
Again, this can be explained because the strategy now represents the buying of two calls and only one put option.

But, so far we have only talked about strategies that use the same strike price.
If you wish to have strategies that use multiple strikes, you need to understand that our syntax is relative.
That means, each option strike is positioned relative to every other option in the strategy.
This is done in order to enable easy application to multiple different option series.

To specify an option strike relative to another option strike, simply add a number to the right of the `c` or ‘` p`` figure, but before the next comma. For example, in its simplest form, if you simply specify  `1c-1`, it would indicate your strategy will always purchase 1 call, and it will be at the strike price one below the ‘central strike’ price. `1c-2`therefore would indicate purchasing the same amount and type of options (1c = one call) but, the strike price would now be two ‘steps’ below the central strike price. If there are no relative numbers (IE:`1c,1p`) then the option is assumed to be applied to the central strike price.
Remember: the central strike price is still a theoretical term,
and it only becomes real once you’ve chosen a strike to apply your strategy to.

Try to create your own custom strategy templates. In order to get you started, here are a few examples:

- `1c, 1p` – a straddle;
- `1c+1, 1p-1` – a strangle with a two strike width;
- `1c, -1c+1` – a vertical bull spread;
- `1c-1,-2c,1c+1` – a long call butterfly;
- `1p-5,-1p-4,-1c+4,1c+5` – an Iron condor with a total ‘width’ of 8-10 strikes;
- `1p-10,-1p-8,-1c+8,1c+10` – an iron condor with a total ‘width’ of 16-20 strikes.

## Applying a strategy to a market using the spread desk

Once you have created a strategy template, it can be applied to real markets.
There are two ways to do this. This first way is to select an options series from the instruments tree, right click it
and select the ‘spread desk’ option.

![](strat_desk.png)
Figure: How to access the new spread desk tab

Once you’ve opened the spread desk, simply select which template you wish to apply to the option series,
and it will be applied, showing all of the spreads qualities including price and the greeks.
Then simply select which strike price is appropriate and drag it into your positions tab,
much like the process of modelling options with the option desk.
You’ll be greeted with a screen detailing which account and strategy the spread will go into, as well as a multiplier,
which asks how many spreads to buy (or sell, then multiplier must be negative).
Finally you can specify how the fills will be made. Because it’s a modelled trade, you can specify the ‘best’ (cheapest) bid/offer,
or chose the midmarket price, which is composed of the average of the bid/offer.
Alternatively you can chose the last traded price, which is composed of the last trades of each option in the spread.
Finally you can chose the theoretical price.

![](strategytemplateform.png)
Figure: The confirmation window you should see before executing a custom spread

Below all of these options will be a mini summary of each option contract that is to be traded.
Once all of the criteria are selected, simply press ok and watch the position populate in the positions tab.

A faster way exists to trade strategy templates. Simply right click on an option in the options desk window
and select the spreads templates option. The ‘central strike’ will be the strike that was selected with the right click.

These two methods allow for either an overall view of your strategies for detailed assessment,
or a quick and convenient way to apply it to your modelling and trading.



# Strategy templates

With this post we are going to open a category of publications, where we write about our plans to implement new features into Option Workshop.
We hope these posts will turn into a dialog with users, so everyone is welcome to comment about these post here at our blog,
in our [google plus](https://google.com/+OptionworkshopNetApp) pages
or at the [support portal/forum](http://help.optionworkshop.net/support/discussions/5000040921).

## The need

There are different approaches to options trading.
One of them is trading standard options combinations, like butterflies, vertical spreads and so on.
Beginners can simply buy/sell one of these combinations with the hope that the price of the underlying will be within a profitable range.
Advanced traders will manage the position over its lifetime. But both beginners and advanced traders need
to find a convenient way to observe and discover the best opportunities to open any position.

Traders need a fast way to understand all of the following factors: the price, the greeks, the maximum profit and the maximum risk
if they opens a spread at a particular strike.

Another need is the ability to create custom templates, for spread trades that are regularly put on.
For example, some traders like to trade ‘standard’ butterflies that only have a one strike distance or ‘step’ between the leg and the center.
Others trade a ‘wider’ butterfly with a 2 or 3 strike step between the wing and the core.
With a custom template, it will be possible to specify the difference between the step, be it a 1, 2 or 5+ strike distance.
Additionally, because of it’s flexibility, you could build the butterfly out of calls or puts, or any combination of both.

:::cut:::

## Syntax

We plan to create a simple syntax for describing combinations in relative form,
i.e. without binding it to a concrete underlying, series or strike.

Let’s start with an example of a combination description in a format which we’ll consider now:

```
1c-1,-2c,1c+1
```

This is a description of a simple long butterfly made up of call options.
Let’s see in detail how this syntax works:

1. The template description row consists of several parts split up by a comma.
2. The first part is `1c-1`.
   It by-turn consists of `1c` and `-1`.
   `1c` means "one bought call option", `-1` means "at strike which lies one step down to the **central strike**".
3. The second part is `-2c`.
   It doesn’t have a second fraction like `-1` in first part.
   It means that it describes the central strike.
   So `-2c` means "two sold call options at the central strike".
4. The third part is `1c+1`, meaning "one long call option at a strike one step higher than the central strike".

**Central strike** is a term in the description above.
It is the strike that the spread is built up around.
If we build the spread above at a central strike of 100 (with the step distance between the strikes being 5), then:

- `-2c` – is two short calls at a strike of 100;
- `1c-1` is one long call at a strike of 95;
- `1c+2` is one long call at a strike of 105.

If we build it at strike 110, then all strike in the list above must be increased by 10.

Here are a few more examples:

- `1c, 1p` – a straddle;
- `1c+1, 1p-1` – a strangle with a two strike width;
- `1c, -1c+1` – a vertical bull spread.

## Templates editor interface prototype

![](templates-manager-form.png)
Figure: Templates editor interface prototype

The layout for a template editor seems to be very simple.
See the image above. It will have the list of default and user defined templates and two interface elements for editing:

- A text field for the template name;
- A text field for the template formula.

For clarity it will be useful to add a small chart, that will show a qualitative risk profile at expiration (payoff function).

## Use of templates

### Quotes and other parameters

![](spread-desk.png)
Figure: Spread desk

There is a class of traders who think in terms of prices of option spreads.
For example, if someone trades butterflies regularly, then it’s natural for him to think of the butterflies price.
IE: “how much is the bid and the offer for a butterfly trading at the 100 strike?”.
Or, what is the current delta/gamma/vega value for this spread and so on.

For these traders it’ll be convenient to have a table, which will show all the parameters of a particular option spread
with all the different strikes (all possible combinations within an options series).
The image above illustrates a prototype of this.

### Quick strategy creation from template

Simple and obvious functionality. If a trader wants to model a position in an options spread,
at the moment they need to manually add a position in each leg.
It is very flexible and gives the ability to model absolutely any options spread, but it’s time consuming in a situation,
where the user needs to model something standard.

What we want to do is to give users the ability to add their butterflies/condors/strangles into a modelling account or strategy in a single click.
In the context menu of a row in the options desk the software will show the item **Templates**
with subitems titled by existed templates names. After the user clicks on an item, the following form will appear:

![](create-strategy-form.png)
Figure: Create strategy form template

The form will require a user to choose an account, where he wants to add a modelling position,
a strategy name (new or existing) and a multiplier – a value at which a number of legs in each leg of the template must be scaled.

What do you think? Tell us here in the comments or anywhere on our social networks pages.


Blog #ui-prototype

Strategy Templates Syntax

Strategy templates

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