Backtesting
Thursday, April 25th 2019
Backtester New Feature: Long & Short Stock Strategies
Backtesting Long Stock And Short Stock Strategies and combining with options strategies like a short call to simulate a covered call or buywrite.
Summary
The Backtester now allows for Long Stock and Short Stock strategies to be run on a symbol or list of symbols with weights and defined start and end dates. This feature is useful for combining stock strategies with other options strategies, such as a short call to simulate a covered call or buywrite. The process involves running a Long Stock and Short Call strategy backtest, selecting both, clicking 'Combine', entering the desired weights, and clicking 'Submit'. The combined strategy will calculate and produce a new backtest. Pricing and subscription information can be found on the ORATS website.
We have added the ability to run a Long Stock and Short Stock strategy to the backtester. You can run the strategies on a symbol, list of symbols with weights, and with defined start and end dates.
This new feature is important 1) to see the results of a stock (or group of stocks) and 2) to combine stock strategies with other options strategies.
Let's look at an example from one of our clients: Sell 2 calls for every 100 shares of long SPY.
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First run a Long Stock strategy and a Short Call strategy backtest. When those tests are complete, check the box next to each name. A 'Combine' button should appear above the backtest list as seen below. If the Combine does not appear you may have to upgrade your subscription which you can do here.
When the Combine Backtest dialog appears enter 2 for the Short Call (indicating a weighting of 200%) and 1 for the Long Stock. Click Submit and the combined strategy will calculate and come up with a new backtest. The results appear like this.
You can check your work like this: The Short Call return is 0.18% times 2 is 0.36% plus the Long Stock return of 9.72% = 10.08% as we see.
Go to wheel.orats.com to try it out!
To see pricing for various levels of the backtester, go HERE.
If you need to upgrade or cancel your subscription you can do that HERE.
Check out backtesting blogs HERE
Check out the new features youtube of the backtester HERE
Disclaimer:
The opinions and ideas presented herein are for informational and educational purposes only and should not be construed to represent trading or investment advice tailored to your investment objectives. You should not rely solely on any content herein and we strongly encourage you to discuss any trades or investments with your broker or investment adviser, prior to execution. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. Option trading and investing involves risk and is not suitable for all investors.
All opinions are based upon information and systems considered reliable, but we do not warrant the completeness or accuracy, and such information should not be relied upon as such. We are under no obligation to update or correct any information herein. All statements and opinions are subject to change without notice.
Past performance is not indicative of future results. We do not, will not and cannot guarantee any specific outcome or profit. All traders and investors must be aware of the real risk of loss in following any strategy or investment discussed herein.
Owners, employees, directors, shareholders, officers, agents or representatives of ORATS may have interests or positions in securities of any company profiled herein. Specifically, such individuals or entities may buy or sell positions, and may or may not follow the information provided herein. Some or all of the positions may have been acquired prior to the publication of such information, and such positions may increase or decrease at any time. Any opinions expressed and/or information are statements of judgment as of the date of publication only.
Day trading, short term trading, options trading, and futures trading are extremely risky undertakings. They generally are not appropriate for someone with limited capital, little or no trading experience, and/ or a low tolerance for risk. Never execute a trade unless you can afford to and are prepared to lose your entire investment. In addition, certain trades may result in a loss greater than your entire investment. Always perform your own due diligence and, as appropriate, make informed decisions with the help of a licensed financial professional.
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Be sure to read the OCCs Characteristics and Risks of Standardized Options to learn more about options trading.
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