Options Selling

SkopaqTrader includes an AI-powered options selling module that analyzes option chains and selects optimal OTM strikes for theta decay strategies.

Supported Strategies

Strategy	Market View	Action	Risk Profile
SHORT_PUT	Bullish	Sell OTM put below support	Profit if stock stays above strike
SHORT_CALL	Bearish	Sell OTM call above resistance	Profit if stock stays below strike
SHORT_STRANGLE	Neutral	Sell both OTM put + call	Profit if stock stays in range

How It Works

The options module (skopaq/options/) has three components:

1. Chain Fetcher (chain.py) -- Fetches the full option chain from Kite Connect with calls, puts, strikes, premiums, OI, and volume
2. Strategy Selector (strategy.py) -- AI algorithm that picks the optimal strike based on distance from spot, premium yield, liquidity, and risk
3. GTT Integration (gtt.py) -- Places automated stop-loss orders on Zerodha

Strike Selection Criteria

For SHORT_PUT, the selector filters puts that are:

• 3-8% OTM (below spot price)
• Premium at least Rs 5
• Reasonable liquidity (volume > 0 or OI > 100)
• Highest premium yield among qualifying strikes

Similar logic applies to SHORT_CALL (3-8% above spot) and SHORT_STRANGLE (both sides).

Using /options

The simplest way to get an options recommendation:

/options                          # NIFTY SHORT_PUT (default)
/options BANKNIFTY SHORT_CALL     # BANKNIFTY bearish
/options RELIANCE SHORT_STRANGLE  # Stock strangle

Example Output

SELL NIFTY 24000 PE at Rs 85
Strike: 24000 (PE) — 4.2% OTM
Expiry: 2026-04-10 (4 days)
Lot Size: 25

Max Profit: Rs 2,125 (85 x 25)
Stop Loss: Rs 255 (exit if premium triples)
Max Loss: Rs 6,375 (255 x 25)
Margin: ~Rs 1,20,000
Win Probability: ~78%

Risk Management:
- Exit if premium doubles (100% SL)
- Exit 2 days before expiry if not profitable
- Never hold through major events without hedging

MCP Tools for Options

Tool	Purpose
get_option_chain	Fetch raw chain data (calls + puts with OI, volume)
suggest_option_trade	Get AI recommendation with risk metrics

Example -- fetch chain manually:

Show me the NIFTY option chain for the nearest expiry.

Claude calls mcp__skopaq__get_option_chain(symbol="NIFTY", expiry_index=0).

Risk Management

Options selling carries significant risk

Selling naked options exposes you to theoretically unlimited loss. Always use stop-losses and position sizing.

Built-in Safeguards

1. Distance filter -- Only selects strikes 3-8% OTM (avoids near-the-money danger)
2. Premium floor -- Ignores strikes with premium below Rs 5 (not worth the risk)
3. Stop-loss rule -- Recommends exiting at 2-3x premium collected
4. Position sizing -- Never risk more than 2% of capital per trade
5. Safety checker -- no_naked_option_selling rule in SafetyRules (can be configured)

Events to Watch

Before selling options, check for:

• Earnings announcements (high IV crush risk)
• RBI policy decisions (macro moves)
• F&O expiry day (Thursday volatility)
• Union budget or major government policy

Architecture

/options NIFTY SHORT_PUT
        │
        ▼
  get_quote(NIFTY)          ← spot price
        │
        ▼
  get_option_chain(NIFTY)   ← full chain from Kite
        │
        ▼
  suggest_option_trade()    ← AI selects strike
        │
        ▼
  Claude presents risk analysis
        │
        ▼
  User confirms → place_order()

Prerequisites

Options trading requires:

1. Kite Connect -- Login via /api/kite/login (options data comes from Zerodha)
2. F&O enabled -- Your Zerodha account must have F&O segment activated
3. Sufficient margin -- Options selling requires margin (shown in recommendation)

Start with NIFTY

NIFTY options have the best liquidity and tightest spreads. Start there before moving to stock options.