The name of this trading robot comes from the fact that the robot trades the time, by this idiomatic expression we mean, as you may guess that the robot Hourglass buys and sells options on the options market. The trading algorithm doesn't make decisions or choose options for creating a position. However, the it's main purpose to keep your strategy as much neutral as possible for the market, a market neutral strategy - independently from the stock or futures fluctuation, whether it goes up or down.
The trading algorithm automatically monitor your position, and therefore calculates Greeks (theta, delta, Vega, gamma), volatility and execute the orders automatically with the underlying asset by the assigned step of hedging (given by points or percentage). If the time decay don't enough for you, you can specify the delta which should be supported by trading robot. The default delta is zero (0), so you set the most convenient position and observe how grow your trading account balance significantly.
The trading algorithm in the Hourglass robot directly linked with trading volatility. You can easily find all terms and explanations online, and how to implement this strategy. We will give you a short and quick example.
Let’s assume that the value of the option strictly depends upon the frequency of fluctuations of the underlying asset. It is essential to know the exact fluctuations, i.e. in other words, the directional movement of 2% is different of the same movement of 1% and then of -1%. The total move of asset will be the same, nevertheless the result of trading options in this case will be different. Based on this point, our view is that the trade of options is primarily trade of time. First and foremost, we evaluate if the underlying security can go upside or beyond the pre-determined levels before the period of expiration. If the answer is yes, then the following question is going to be in which direction this will most likely follow. We give a guess, that for instance the underlying asset won't leave the range but go right in down direction.
How can trading robot help to evaluate the market and make some profit? Firstly, the trading algorithm built in robot estimates the average value of fluctuations of the underlying security. The directional dynamism is excluded in this case. Based on this value, the trading robot automatically advices you to make an optimal re-hedging step, in other words: that movement scale through which the delta hedger will be execute the whole sum position by options and the underlying security for 0 (or any other value chosen by user). A trader always has an option to change the robot settings and decline an order.
Besides it, our trading robot supports hedge by time, by delta size, conditional hedging ( in case if the closing candle will be more or less than a level of specified by user), hedging of the only part of option position.
Designing the functionality of our robot we considered all possible strategies and variations and methods which can be useful for traders. The trading algorithm can create an option synthetic position exclusively using futures with any strike, any asset or date of expiration.
This is so called position replication.
Overall, the capabilities and capacity of this trading robot is almost unlimited, we've mentioned here only the part of how the robot’s algorithms work and how it trades on exchanges.
This trading robot can reach 50%-year profit.