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Momentum Options Agent
Momentum Options Agent is an autonomous AI trading agent that trades options on Alpaca's paper environment. Every 2 minutes during US market hours it scans a curated universe of volatile, optionable names (high-beta tech, quantum, clean energy, biotech, crypto/fintech), ranks them by true intraday momentum, and enters at-the-money call options on strong risers or put options on strong fallers — but only on a small pullback, and only when the daily and intraday direction agree. The core strategy was adapted from a battle-tested equity momentum system. Moving to options fixed its two worst weaknesses: a long option's maximum loss is its premium (defined risk, so fast collapses can't cause outsized losses), and puts express bearish views directly instead of via inverse ETFs. A hard risk governor gates every trade: per-trade sizing by premium, max positions, one-per-underlying, cooldowns, a daily circuit breaker, and contract-quality filters (delta ~0.50, tight spread, minimum premium) learned from real losing trades. Exits use a trailing ratchet — ported from the equity strategy and simulated agent-side, since Alpaca doesn't support server-side trailing stops on options — plus percentage and dollar stops and an end-of-day flat close. An LLM reasoning layer (OpenAI) reviews each rules-approved trade, can veto clearly-bad setups, and writes a natural-language rationale into the journal. It is fail-safe: if the API errors, trades proceed on the rules. All market data and order flow route through the Alpaca CLI, which calls the Alpaca Trading API. The agent runs unattended with an auto-restart supervisor. Over the week it was used as a research instrument — testing momentum, then mean-reversion, then diagnosing that the decisive variable was the universe — culminating in a clearly profitable day once genuinely volatile names were traded.
4 Sep 2026
