Options traders who want to use their own trade inputs to target vega in their options trades need look no further.
Wolverine Execution Services (WEX) has now added advancedposting logic to Vega Trader, its latest trading applet that allows users to provide trade inputs to specify a target amount of vega to execute across a range of option expirations and strikes. VegaTrader, only available on the WEX Trading Platform, helps traders manage risk by allowing them to efficiently manage volatility positions.
According to WEX, the addition of new posting logic, traders now have the following flexibility in the way options orders are placed into the market:
Join– Places option orders to buy at the bid or sell at the ask when specified market conditions are met. Orders are designed to only post liquidity. Users can also elect to only join markets until an opportunity to remove liquidity presents itself, at which point the market is swept prior to the order returning to a passive joining only mode.
Post – The initial order will be placed at the most aggressive price allowable without violating the desired volatility limit. This may, or may not, result in the initial order taking liquidity or improving the current market.
Take– An order is only placed when the desired limit is currently achievable in the marketplace. It will only take liquidity which allows a trader to hide the size of the order.
Vega Trader meets the evolving needs of volatility traders, including dispersion strategies, event-driven volatility strategies, volatility arbitrage, and hedging strategies, said Kevin Kernan, Director of WEX Product Development. This upgrade includes several performance enhancements in addition to improved functionality.
With Vega Trader, traders can define a target Vega amount for a specific underlie, monitor the overall status on the achieved Vega, hedge quantities, and P&L, load up to 40 strikes for the underlier by expiration, root, or delta range and hedge with the underling or use a different hedge product.
Also, traders can select custom routes, including WEX Sweep for options and WEX Best X for hedging and limit the exposure on any one strike by setting a maximum amount of Vega per strike.
