Introducing the Bittman Algorithm

September 30, 2014

This is a repost of an article recently published on the blog for my new startup, Alta5. Our platform enables investors to automate stock and options trading strategies using JavaScript.

In 2012 Jim Bittman, Director of Program Development and a Senior Instructor for The Options Institute at CBOE, gave a presentation that outlined a 2-step strategy for trading the S&P 500 Index (SPX) using weekly options. The strategy is particularly attractive because Mr Bittman supplied very specific entry and exit points, back testing data, probabilities and a detailed comparison vs trading once a month using standard monthly SPX options. This weekly strategy was one of the primary strategies that inspired the creation of altarithm.

In this article, we will discuss the results and challenges faced while manually trading the strategy Mr Bittman outlined, how altarithm has solved those challenges while increasing returns by 1.5% per week and how to set up and use the Bittman algorithm for yourself.