Query: How Can We Protect the Zen Credit Spread Overnight Strategy From Major Overnight Gap Risk?

Stratzy Algos
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Hi @smnthlhr

Thank you for sharing your detailed observation and for highlighting an important aspect of overnight algos. Please find the clarifications to your questions below:

  1. We would like to clarify that Zen Credit Spread Overnight is a hedged strategy, where the positions are structured with defined hedge legs as part of the strategy design. This hedge structure is intended to provide protection against adverse market movements, including significant overnight moves.

    However, the extent of protection and the actual Profit and Loss during an exceptional gap can vary depending on the magnitude and speed of the market movement, execution prices, and prevailing market conditions. Hence, the hedge provides a risk-management layer, but the outcome can vary during rare, high-impact/black swan events.

  2. The Kill All Trading Algos feature is available only during market hours. Therefore, it cannot be activated after market close, such as around 3:45 PM. During market hours, it exits open Algo positions and pauses new trades for the day.

  3. If the Algo has already entered an overnight position, the position will remain open as per the Algo’s predefined overnight strategy and will be closed when the predefined exit conditions are satisfied.

  4. All algos generate and execute trades when their predefined conditions are satisfied. The exact entry is signal-driven rather than based on a fixed daily trade time.

  5. This has already been addressed in one of our earlier posts. You can refer to it below: Exit all button - #6 by jay.gori

  6. This has already been addressed in one of our earlier posts. You can refer to it below: Once an algo is deployed and a trade is running, how can I manually close the trade? - #5 by harishkarthik7777

  7. There is currently no separate feature to skip only the next overnight trade while keeping the Algo active for subsequent signals. You can use the available trading controls to pause Algo trading when required. You can also turn off an algo’s automation from the application by going to the PnL section and, after clicking the algo, turning off the green toggle in the top-right.

  8. Kill All Trading Algos exits all open Algo positions and pauses new trades for the day. Therefore, it can affect both existing Algo positions and future Algo orders for the day.

The Algo’s predefined risk-management framework remains applicable, while manual controls such as manual exit and Kill All Trading Algos provide additional ways to manage active Algo positions.

I hope this provides some clarity.

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