Algorithmic Options Trading on Interactive Brokers' Platform from Udemy

The much awaited and sought after Options Trading course is here.

Most Algorithmic trading courses focus on stocks and forex (and lately crypto asset classes) but avoid derivative trading owing to the complexity associated with effectively implementing derivative (options and futures) trading strategies. However, this course will not only introduce you to trading options algorithmically on Interactive Brokers platform but also help you gain a thorough understanding of IBAPI options trading tools to help implement complex strategies such as Straddle and Bear Spread.

You can expect to gain the following skills from this course

Basics of options trading and option valuation
Implement option valuation using the Black Scholes model and Monte Carlo Simulation
Calculate implied volatility using the Black Scholes model.
Options trading settings on TWS and market data access
Extracting option chain for any underlying
Using parallel programming/multi threading to stream and store options market data
Extracting options historical data
Identifying option contracts of interest algorithmically
Advanced order types (Combo)
End to end design and deployment of advanced strategies (Straddle & Bear Spread)

I have created this course based on the strong and persistent demand for an options trading course from my existing students. This course seeks to provide you with the required tools to deploy any kind of options trading strategy on Interactive Brokers platform and gain an edge by leveraging IBAPI's advanced functionalities.

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Course Prerequisite

This is a conceptually advanced and technically involved topic and therefore completion of my other two IBAPI courses listed below is required to get the most out of this course

1) Algorithmic Trading using Interactive Broker's Python API

2) Interactive Brokers Python API - Advanced Concepts

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The course covers and implements Options Straddle and Bear Spread strategy which are quite complex to implement as they require a number of tasks to be performed in tandem (e.g. extracting options chain, streaming options market data, identifying option contracts of interest, generating signals and executing orders). The course explains how such strategies can be built step by step and how the various IBAPI tools can be used efficiently to ensure that the various parts of the strategy work harmoniously.

What's inside

Learning objectives

Learn about options trading
Trade options algorithmically

Gain familiarity with ibapi tools
Use parallel programming concepts to implement sophisticated trading strategies

Learn about options trading
Trade options algorithmically
Gain familiarity with ibapi tools
Use parallel programming concepts to implement sophisticated trading strategies

Syllabus

Introduction to Options Trading and Valuation

IBAPI Courses

Why This Course?

Course Structure

What is a Financial Option

Options Payoff

Option Valuation Intuition and Careers in Quantitative Finance

Calculating Historical Volatility to Feed Black Scholes Model

Pricing Options using Black Scholes Model

What is Implied Volatility

Calculating Implied Volatility using Black Scholes Model

Monte Carlo Simulation Intuition

Pricing Options using Monte Carlo Simulation

Handling Option Chains and Contracts

Important - Debugging Errors Arising from Function Signature Changes

IBAPI Function Change Catalogue

Subscribing to Options Market Data

Option Chain and Option Contract - Intro

Extracting Option Chain and Option Contract Details

Parsing Option Contract Details

Storing Option Contract Details

Storing Option Contract Details in DataFrames

Assignment - Extract Option Contracts Expiring in Future Months

Assignment Solution

Selecting Required Option Contract from the Option Chain

Selecting Desired Option Contract - Intro

Current Price Streaming Using Multithreading - Recap

Getting ATM Option Contract from the Option Chain

Assignment - Get Desired Option Contract from the Option Chain

Streaming Options Market Data

Streaming Real Time Market Data - Intro

Streaming LTP of a Specific Option Contract

Streaming LTP of Multiple Option Contracts - I

Streaming LTP of Multiple Option Contracts - II

How to Interpret Option OI and Volume

Streaming OI and Vol of a Specific Option Contract

Streaming OI and Vol of Multiple Option Contracts - I

Streaming OI and Vol of Multiple Option Contracts - II

Accessing Option Greeks in TWS

Getting to Know the Greeks

Streaming IV and Greeks for a Specific Option Contract

Streaming IV and Greeks for Multiple Option Contracts

Placing Option Orders

Placing Option Orders in TWS

Submitting Limit Order for a Standalone Option Contract

Placing Combo Orders for a Standalone Option Contract

Placing Combo Orders for a Straddle Strategy

Placing Non Guaranteed Combo Orders

Placing Bracket Orders for Combo Contracts

Checking Position and Open Order for Options

Implementing Bear Spread Strategy

Bear Spread Strategy - Intro

Getting Historical Data & Performing Technical Analysis

Getting ATM and OTM Option Contracts for Screened Stocks

Streaming Market Data for Selected Option Contracts

Ranking Selected Options Based on Payoff to Risk Ratio

Placing Combo Orders for Selected Option Contracts

Key Takeaways and an Assignment

Extracting Historical Data of Derivative Contracts

Derivative Historical Data Intro

Extracting Historical Data of Futures Contracts

Extracting Historical Data of Live Options Contracts

Extracting Historical Data of Expired Options (Intuition)

Extracting Historical Data of Expired Options - I

Extracting Historical Data of Expired Options - II

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Algorithmic Options Trading on Interactive Brokers' Platform with these activities:

Review Options Trading Fundamentals

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Solidify your understanding of options trading basics before diving into algorithmic strategies. This will help you grasp the more complex concepts covered in the course.

Browse courses on Options Trading

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Review the definition of call and put options.
Understand the factors affecting option prices.
Familiarize yourself with common options trading terminology.

Brush Up on Python Multithreading

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Practice Python multithreading to prepare for streaming and processing options market data efficiently. This will improve your ability to handle real-time data feeds.

Browse courses on Multithreading

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Review the basics of Python threading and multiprocessing.
Practice creating and managing threads in Python.
Experiment with thread synchronization techniques.

Hull's Options, Futures, and Other Derivatives

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Use this book as a reference to deepen your understanding of options pricing models and trading strategies. It will help you implement more sophisticated algorithmic trading strategies.

View Risk Management and Financial Institutions... on Amazon

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Read the chapters on option pricing models.
Study the sections on hedging and risk management.
Review the examples of options trading strategies.

Five other activities

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Implement Black-Scholes Model

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Practice implementing the Black-Scholes model in Python to calculate option prices and implied volatility. This will reinforce your understanding of option valuation.

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Write a Python function to calculate the Black-Scholes price.
Test your function with different option parameters.
Calculate implied volatility using your Black-Scholes implementation.

Document Your Trading Strategies

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Create a blog post or documentation outlining the Straddle and Bear Spread strategies covered in the course. This will help solidify your understanding and allow you to share your knowledge with others.

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Describe the Straddle and Bear Spread strategies in detail.
Explain the risk and reward profiles of each strategy.
Provide examples of how to implement these strategies using IBAPI.

Backtest a Simple Options Strategy

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Develop a backtesting framework to evaluate the performance of a simple options trading strategy using historical data. This will give you practical experience in strategy development and evaluation.

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Gather historical options data from Interactive Brokers.
Implement a backtesting engine in Python.
Test your backtesting engine with a simple options strategy.
Analyze the results of your backtest.

Contribute to an IBAPI Wrapper Library

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Contribute to an open-source IBAPI wrapper library by adding functionality for options trading. This will enhance your understanding of the API and benefit the wider community.

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Identify an open-source IBAPI wrapper library.
Explore the library's codebase and identify areas for improvement related to options trading.
Implement new features or fix bugs related to options trading.
Submit your changes as a pull request.

Trading Options Greeks

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Study this book to gain a deeper understanding of options greeks and their impact on trading strategies. This will help you manage risk more effectively in your algorithmic trading.

View Trading Options Greeks: How Time, Volatility,... on Amazon

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Read the chapters on delta, gamma, theta, vega, and rho.
Understand how greeks affect option prices.
Learn how to use greeks to manage risk in options trading.

Career center

Learners who complete Algorithmic Options Trading on Interactive Brokers' Platform will develop knowledge and skills that may be useful to these careers:

Quantitative Trader

The role of a Quantitative Trader necessitates a strong understanding of algorithmic trading, especially in derivatives. This course equips you with the knowledge to trade options algorithmically on the Interactive Brokers platform. A quantitative trader develops and implements automated trading strategies. This requires skills in option valuation, implied volatility calculation, and the deployment of complex strategies such as Straddles and Bear Spreads. With its intensive exploration of IBAPI tools and options trading, this course helps you to gain an edge. The course's hands-on approach to deploying option trading strategies makes it perfect for aspiring quantitative traders looking to enter the field. Its focus on options sets it apart from typical algorithmic trading resources.

See salaries and explore the career path for Quantitative Trader

Algorithmic Trader

An Algorithmic Trader automates trading strategies using computer programs. This course helps prepare someone for that role by providing detailed instruction in algorithmic options trading using the Interactive Brokers platform. The course thoroughly covers implementing option valuation, calculating implied volatility, extracting option chains, and using multithreading to stream and store options market data. Skills such as designing and deploying strategies like Straddles and Bear Spreads, which this course directly addresses, are essential. Given the advanced nature of algorithmic options trading, this course may be of particular help for those wanting to specialize their algorithmic trading skills.

See salaries and explore the career path for Algorithmic Trader

Options Trader

The Options Trader role involves strategically buying and selling options contracts to profit from price movements. This course offers a solid foundation in the specifics of options trading on the Interactive Brokers platform. The course focuses on options trading and valuation, and it covers implementing Black Scholes and Monte Carlo models, calculating implied volatility, and using IBAPI tools. Additionally, the course provides hands-on experience with complex strategies like Straddles and Bear Spreads. The focus on practical application and specific strategies may be particularly useful for those looking to trade options.

See salaries and explore the career path for Options Trader

Financial Engineer

A Financial Engineer designs and implements complex financial models and strategies. This course may be useful for those in this career due to its concentration on options trading and valuation. The course covers implementing option valuation using the Black Scholes model and Monte Carlo simulation, calculating implied volatility, and extracting option chain data. The practical experience with IBAPI tools and complex strategies, such as Straddle and Bear Spread, provides hands-on exposure to techniques used in financial engineering. The algorithmic approach to trading is particularly relevant for financial engineers involved in automated trading systems.

See salaries and explore the career path for Financial Engineer

Hedge Fund Analyst

A Hedge Fund Analyst researches and analyzes investment opportunities for a hedge fund. This course may be useful to those in this role due to its focus on options trading strategies. The course covers implementing option valuation, calculating implied volatility, and identifying option contracts of interest algorithmically. The course also provides insights into designing and deploying advanced strategies such as Straddles and Bear Spreads while using IBAPI's advanced functionalities. This focus on practical application and advanced tools is relevant to a hedge fund analyst needing to understand and evaluate complex trading strategies.

See salaries and explore the career path for Hedge Fund Analyst

Investment Strategist

An Investment Strategist develops and recommends investment strategies. This course may be useful for this career due to its focus on options trading and algorithmic implementation. This course covers implementing option valuation using the Black Scholes model and Monte Carlo simulation, calculating implied volatility, and using parallel programming to stream and store options market data. Furthermore, the course provides experience in designing and deploying strategies like Straddles and Bear Spreads. The systematic approach to options trading provided by this course may be valuable for devising well-reasoned and data-driven investment strategies.

See salaries and explore the career path for Investment Strategist

Portfolio Manager

A Portfolio Manager is responsible for managing investment portfolios to meet specific goals. This course may be useful for those interested in leveraging options trading within their portfolios. This course covers options trading and valuation, and it also goes over implementing Black Scholes and Monte Carlo models, extracting option chains, and using different order types. Developing and implementing advanced strategies such as Straddles and Bear Spreads may be useful, and this course provides experience in these approaches. A portfolio manager seeking to incorporate algorithmic options trading may find the systematic methods of this course helpful.

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Data Scientist

Data Scientists analyze complex data to derive insights and build predictive models, which is a skill that may be broadly applicable to trading. Although this course focuses on developing proficiency with options, algorithmic strategies, and IBAPI tools, the course includes an emphasis on data collection, storage, and analysis relevant to financial markets. This may be of use to Data Scientists. For example, the use of parallel programming and multithreading to stream and store options market data may be applied to other areas of data science. The use of algorithms to identify contracts may also be useful.

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Software Engineer

Software Engineers design, develop, and test software systems. This course may be useful for those looking to apply their skills in the financial sector, particularly in algorithmic trading. Although the course focuses on options, it covers programming concepts such as using parallel programming and multithreading to stream and store options market data. Furthermore, the course provides hands-on experience in implementing complex trading strategies on the Interactive Brokers platform, including the use of advanced order types and the deployment of automated systems. Software engineers seeking to build trading platforms or automated trading systems may find the course helpful.

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Financial Advisor

Financial Advisors provide financial advice and guidance to clients. This course may be useful for those who want to expand their knowledge of options trading and algorithmic strategies. This course includes learning about implementing option valuation; using the Black Scholes model and Monte Carlo simulation; and calculating implied volatility. Familiarity with these concepts may allow Financial Advisors to better understand and explain investment options to clients. This course may also help Financial Advisors who want to implement more sophisticated investment strategies.

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Risk Manager

Risk Managers identify, assess, and mitigate risks within an organization. This course may be useful for those who want to understand the risks associated with options trading. This course covers options trading and valuation. The course also goes over implementing the Black Scholes model and Monte Carlo simulation. The course also instructs on calculating implied volatility and using advanced order types. A Risk Manager can gain a better understanding of how to assess and manage the risks associated with complex options strategies by becoming familiar with these factors.

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Management Consultant

Management Consultants provide strategic advice and guidance to organizations, and those who focus on the financial services industry may find this course to be useful. This course focuses on algorithmic options trading on the Interactive Brokers platform, including implementing Black Scholes and Monte Carlo Simulation, calculating implied volatility, and using parallel programming. Although this course focuses on options, it may assist Management Consultants in understanding key concepts and how to implement strategies. In particular, the focus on Straddle and Bear Spread strategy is practical and insightful.

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Actuary

Actuaries assess and manage financial risks, and those who specialize in financial derivatives may find this course helpful. This course focuses on algorithmic options trading on the Interactive Brokers platform, including implementing Black Scholes and Monte Carlo Simulation, and includes calculating implied volatility. Although this course focuses on options, it may assist Actuaries in understanding key concepts and how to use quantitative models. In particular, the focus on risk management within Straddle and Bear Spread strategy is practical and insightful.

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Credit Analyst

Credit Analysts assess the creditworthiness of individuals or organizations. This course helps those professionals by discussing option payoffs; option valuation; Black Scholes for calculating historical volatility; IBAPI function changes; extracting option chains and parsing contract details; streaming market data; placing option orders; Bear Spread; extracting historical data of futures and options; and more. This course is especially useful for those who need to analyze the credit risks associated with complex financial instruments.

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Business Analyst

Business Analysts analyze an organization's business processes and systems. By focusing on options trading, algorithmic strategies, and IBAPI tools, the course may be useful for business analysts seeking to improve their understanding of trading systems and strategies. Learning topics such as option valuation using the Black Scholes model, calculating implied volatility, and extracting option chain data can improve one's ability to analyze related business operations. This course may be especially useful for those working in the financial sector.

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Algorithmic Options Trading on Interactive Brokers' Platform

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