options-strategist

Analyze options chains, compute implied volatility rank, and select optimal multi-leg strategies based on market conditions via the Finskills API.

Analyze options chains, construct multi-leg strategies, calculate Greek risk metrics, and generate structured trade recommendations using real-time options data from the Finskills API. Combines quantitative options theory with live market data to evaluate opportunity and manage risk.

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Setup

API Key required — Register at https://finskills.net to get your free key.
Header: X-API-Key: <your_api_key>

Get your API key: Register at https://finskills.net — free tier available, Pro plan unlocks real-time quotes, history, and financials.

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When to Activate This Skill

Activate when the user:

• Asks which options strategy is best for a given outlook
• Wants to analyze a specific options contract or expiration
• Asks about Greeks (Delta, Gamma, Theta, Vega) for a position
• Wants to build a covered call, protective put, spread, straddle, or iron condor
• Asks about implied volatility, volatility skew, or IV rank
• Wants to calculate break-even points or max profit/loss for a trade

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Required Information

Resolve before starting:

1. Underlying ticker — e.g., SPY, AAPL
2. Directional outlook — Bullish / Bearish / Neutral / Volatile / Non-volatile
3. Time horizon — Days to target expiration (e.g., 30, 45, 60 DTE)
4. Risk tolerance — Defined-risk vs. undefined-risk strategies preferred
5. Account level — Options approval level (Level 1–4) if known

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Data Retrieval — Finskills API Calls

1. Real-Time Quote

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GET https://finskills.net/v1/stocks/quote/{SYMBOL}

Extract: price (current underlying price), volume, changePercent

2. Options Chain

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GET https://finskills.net/v1/stocks/options/{SYMBOL}

Extract from each contract:

• strike, expiration, type (call/put)
• bid, ask, mid (use mid for pricing)
• impliedVolatility (as decimal, multiply by 100 for %)
• delta, gamma, theta, vega (Greeks)
• openInterest, volume
• inTheMoney flag

3. Historical Price (for IV Rank / Realized Vol)

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GET https://finskills.net/v1/stocks/history/{SYMBOL}?period=1y&interval=1d

Extract closing prices; compute:

• HV20: 20-day historical volatility (annualized standard deviation of daily returns × √252)
• HV60: 60-day historical volatility
• Price range: 52-week high/low for support/resistance context

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Analysis Workflow

Step 1 — Market Context

From the quote data, note:

• Current price vs. 52-week range (where in range?)
• Recent price momentum (up/down trend)
• Sector/market context (risk-on/off environment)

Step 2 — Volatility Analysis

Using the options chain and historical data:

Implied Volatility Metrics:

• ATM IV: Use implied volatility of the nearest-to-ATM straddle
• IV Rank (approximation): (Current ATM IV − 52w Low IV) / (52w High IV − 52w Low IV) × 100
  • IV Rank > 50: Elevated IV → consider selling premium
  • IV Rank < 30: Low IV → consider buying premium

Volatility Skew: Compare put IV vs. call IV at equidistant strikes

• Positive skew (puts more expensive): Market pricing downside protection
• Flat skew: Balanced two-directional uncertainty

HV vs. IV Comparison:

• IV > HV by > 20%: Premium selling opportunity (high vega)
• IV < HV: Premium buying may be cheap

Step 3 — Strategy Selection Matrix

Based on outlook and volatility environment:

Outlook	IV Environment	Recommended Strategy
Bullish	Low IV	Long Call, Bull Call Spread
Bullish	High IV	Cash-Secured Put (sell put), Bull Put Spread
Bearish	Low IV	Long Put, Bear Put Spread
Bearish	High IV	Bear Call Spread, Covered Call
Neutral (non-volatile)	High IV	Iron Condor, Short Strangle, Short Straddle
Neutral (volatile)	Low IV	Long Straddle, Long Strangle
Mildly Bullish	High IV	Covered Call, Bull Put Spread
Hedge existing long	Any	Protective Put, Collar

Always prefer defined-risk strategies unless user explicitly requests undefined risk.

Step 4 — Strike and Expiration Selection

Expiration guidelines:

• Income strategies (iron condor, credit spreads): 30–45 DTE (optimal theta decay)
• Directional strategies (debit spreads): 45–90 DTE (time buffer)
• Long options (earnings plays, catalysts): 1–2 weeks past the event

Strike selection guidelines:

• Delta guide: Long calls/puts: 0.30–0.50 delta for balanced risk/reward
• Credit spreads: Sell at 0.25–0.35 delta (≈ 70–75% probability of profit)
• Iron condor wings: 0.15–0.20 delta for outer strikes
• ATM for straddles/strangles: Use the nearest strike(s) to current price

Step 5 — Strategy Metrics Calculation

For the recommended strategy (manual calculation using API data):

For Debit Spreads (e.g., Bull Call Spread):

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Max Profit  = (Width of spread − Net debit) × 100
Max Loss    = Net debit × 100
Break-Even  = Long strike + Net debit paid
ROI at max  = Max Profit / Max Loss × 100%

For Credit Spreads (e.g., Bull Put Spread):

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Max Profit  = Net credit received × 100
Max Loss    = (Width of spread − Net credit) × 100
Break-Even  = Short strike − Net credit received
Probability of Profit ≈ 1 − short put delta (as %)

For Iron Condors:

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Max Profit  = Total net credit × 100
Max Loss    = (Width of widest wing − Total credit) × 100
Lower B/E   = Short put strike − Total credit
Upper B/E   = Short call strike + Total credit

Greeks for the position:

• Position Delta: Net sum of (leg delta × lots × sign)
• Position Theta: Net sum of (leg theta × lots × sign) — daily P&L from time decay
• Position Vega: Net sum — how much P&L changes per 1% IV move

Step 6 — Risk Management Rules

Always state:

1. Max loss cap: Risk no more than 2–5% of portfolio per trade
2. Exit at 50% max profit (for credit strategies): Lock in profit, reinvest theta
3. Exit at 2× max credit (stop-loss): Close if spread doubles in value against you
4. Adjust or roll if: Underlying breaches short strike by more than 1 strike width
5. Earnings blackout: Close or roll before earnings if not intentionally an earnings play

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Output Format

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╔══════════════════════════════════════════════════════╗
║     OPTIONS STRATEGY REPORT — {TICKER} ({DATE})     ║
╚══════════════════════════════════════════════════════╝

📌 UNDERLYING
  {Ticker}: ${price}  Change: {%}  Outlook: {Bullish/Bearish/Neutral}

📊 VOLATILITY ENVIRONMENT
  ATM IV:        {%}    IV Rank: {0–100} → {Low/Elevated/High}
  HV20:          {%}    HV60: {%}
  IV vs HV:      {premium/discount}
  Skew:          {Positive/Flat/Negative} — {one-line interpretation}
  Recommendation: {Sell premium / Buy premium}

🎯 RECOMMENDED STRATEGY: {STRATEGY NAME}

  Structure:
    Leg 1: {BUY/SELL} {qty} {TICKER} {Strike} {Exp} {CALL/PUT}  @ ${price}
    Leg 2: {BUY/SELL} {qty} {TICKER} {Strike} {Exp} {CALL/PUT}  @ ${price}
    [Additional legs if applicable]

  Net {Debit/Credit}: ${amount} per contract

  📐 Key Metrics:
    Max Profit:   ${amount} ({%} ROI)
    Max Loss:     ${amount}
    Break-Even:   ${price} [{direction} from current]
    Prob of Profit: {%}
    Days to Exp:  {DTE} days

  📉 Position Greeks (per contract):
    Delta: {value}  Gamma: {value}  Theta: {value}/day  Vega: {value}

  💼 Risk Management:
    ✓ Profit target: Close at 50% max profit (${amount} credit remaining)
    ✓ Stop-loss: Close if debit/spread reaches ${amount} (2× initial credit)
    ✓ Time exit: Close or roll at 21 DTE to avoid gamma risk

📋 ALTERNATIVE STRATEGIES CONSIDERED
  {Alternative 1}: {brief rationale for/against}
  {Alternative 2}: {brief rationale for/against}

⚠️ KEY RISKS
  • {Risk 1 — e.g., earnings announcement within DTE, sudden vol crush}
  • {Risk 2 — e.g., gap risk if undefined risk}

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Limitations

• Options chain data reflects last available bid/ask; actual fills may differ.
• IV Rank is approximated from available chain data, not full 52-week option history.
• Greeks calculations assume no dividends or early assignment unless noted.
• This is not personalized financial advice; consult a licensed advisor before trading options.