Option Omega is automated options backtesting software that can produce backtests dating back to 2013 in minutes. The software also uses one-minute data, which is crucial, especially when dealing with 0 and 1-DTE options backtests.
Continue reading to learn more about Option Omega, and why it is my favorite options backtesting software.
Key Features of Option Omega
- 1-minute historical data, ensuring accurate results
- Build portfolios by combining multiple strategies in the same backtest
- Backtest SPY, SPX, QQQ, IWM, and TSLA
- Test back to 1/1/2013 – yesterday
The software is normally $99 per month or $599 annually. However, with my affiliate link, you can get Option Omega for just $50 per month.
Creating a Backtest Example
Once you sign in, you will see tests and portfolios at the top left.
To begin your first backtest:
1- Click tests
2- Click the new backtest button
3- Begin setting your parameters
4- Be careful not to click off to avoid disrupting your parameters
Setting up Test Parameters
The parameters are incredibly customizable, and I highly recommend you test multi-leg strategies like iron condors and put credit spreads one leg at a time, then combine them in a portfolio. This isn’t necessary, but it can be more efficient and customizable.
You can customize the following in your backtest:
1- Start date: 1/1/2013 is the earliest start.
2- End date: Test as recent as the previous trading day.
3- Ticker: SPX, SPY, QQQ, IWM, TSLA
4- Strategy (optional): Choose a preloaded strategy like iron condor or iron fly
5- Add leg: Customize the entry parameters for each leg, including:
- Sell or Buy
- Put or Call
- Quantity
- Delta
- DTE
SPX/SPY 1DTE Backtest Example
In our example, we will test a 1-DTE short-put strategy on the SPX and SPY. To account for the weekend when the market is closed, we will have to run a separate 3DTE test for Friday’s “1-DTE” trades.
So, in Option Omega, I simply select the start date as 1/1/2013 and the end date of yesterday. Next, I choose SPX, then add a leg. The leg will be:
- Sell
- Put
- 1 QTY
- 15 Delta
- 1 DTE (Separate 3DTE Friday only test)
- Daily frequency 15 minutes before close (Weekly, then click for Friday 3DTE)
- -600% stop loss
- Early exit at one minute before close
- 1 max contract per trade
- Ignore margin requirements
I will check “use exact DTE” to ensure it only does the 1DTE trades. For starting funds, I usually go with a high number, like $10,000,000, for the most flexibility.
I will use 1 contract per day to remain consistent, and later in Google Sheets, we will be able to adjust the number of contracts sold based on account size. You can do this by exporting the backtest data from Option Omega. You can view my Google Sheet for this SPY/SPX 1DTE backtest and make a copy if you’d like to use the template for your own Option Omega exports.
You can customize the commissions and fees to your own broker, plus you can control the leverage based on notional value. For example, selling one SPY 400 strike put is $40,000 of notional value. Changing the leverage to the spreadsheet to 1 will sell 1 contract for every $40,000 of net liquidity. You can also change the account net liq size.
My sheet will calculate the following for you based on your Option Omega export results:
- PCR (premium capture rate): Total profit / Total premium sold
- Win rate %
- Total return
- CAGR: Compound annual growth rate
- Max drawdown
- Mar ratio
- Sharpe ratio
- Max % stop loss hit
- Max one contract loss
- Max daily % drawdown
Combining the Tests in Portfolios
Since I ran two backtests in this case (1 & 3DTE for Friday entries), to combine them into a single test, we can use the portfolios feature. Simply click portfolios at the top left, and then click New Portfolio.
You will be able to customize the starting funds and the start and end dates for the portfolio test. Next, I will check the two backtests I want to combine, then click run.
This will combine the 1 and 3DTE tests together in a single test. Next, you can click “Trade Log” and then use the export to CSV option if you want to analyze the data in Google Sheets. The Benefit of using Google Sheets is you can easily change commissions and leverage based on net liquidity, which you can do in my Google Sheets template.
Key Features of Option Omega
Option Omega stands out in the options backtesting world because it combines automated backtesting with 1-minute historical data. Prior to this software, you’d have to manually backtest with software like OptionNet Explorer for this level of accuracy.
The ability to run hundreds of 10+ year backtests in minutes is amazing and allows retail traders to build conviction in their options trading. There are tons of ways to modify the test to suit your style, and it is easy to spend hours on Option Omega tweaking your backtests.
Pricing and Accessibility
Option Omega is accessible to everybody, as you do not have to install any software. It is normally $99 per month, but our readers can get 50% off using our Option Omega affiliate link.
Option Omega – Bottom Line
Option Omega is an excellent resource for options traders looking to build conviction in their strategies. Option Omega is definitely worth a shot if you want automated backtesting software with accurate 1-minute historical data. Consider reading my article about using my Option Omega discount code.
Disclaimer: Financial Tech Wiz is an affiliate of Option Omega and may receive a commission if you sign up using our affiliate link.
