Straight up market finally pauses; Traderbot is in testing with a Python IB library that works! Minding the gap

Friday's market down move was blamed on the coronavirus now troubling China ...

But: who knows? The market has been going mostly up for almost 11 years, so any change would not be a surprise ...

However, with the Dynamic Covered Strangle, it doesn't make any difference what the market does (with one exception, discussed below).

Once again, we sell a futures put and call, not too far away from the money (.30 delta) and then set our traderbot to watch the two short strikes and buy or sell the underlying future as needed. Then we relax and let the options expire down to near their external value, close the trade and do it again, forever.

The main risk we face is a gap in the futures price, when an external event (especially during the shutdown in trading Friday to Sunday) happens, like this:

I don't have the data to detect the frequency of this sort of thing, but it seems to be rare enough to be not a risk to the overall strategy, especially if (as I plan) I'll be diversified over several different futures underlyings. Oil is vulnerable to this particular shock; soybeans more vulnerable to this one:

These shouldn't happen at the same time ... and my strategy for managing such a thing would be like this:

• Move the "virtual short strike" to wherever we got the underlying futures price filled at, and run the traderbot as normal, trading back and forth around this value.
• Wait for most time value of the option to expire ... if the underlying value is still way up beyond the gap, we have to take whatever loss is the value between the original short strike and the new "virtual one." But we also have a chance for the underlying price to snap back, as happened recently during one of the Iranian attacks on a Saudi oil facility; the price spiked over the weekend but came right back to the mid-50's where it started ... no harm done if managed as described above.

Keep calm and carry on, in this situation as in much of life!

Finally a piece of excellent news .. I am testing the traderbot with a Python library that works with Interactive Brokers! 

I should have this ready to deploy by next week ...

Watch this space!