📅 Contract Selection in Option Structures

When defining option legs in Allasso backtests, the contract selection logic controls which specific expiry is used when opening or rolling a position. Two key parameters govern this:

🔧 1. min_dte – Minimum Days to Expiry

This sets the minimum threshold for eligible contracts based on the Number of Days to Expiry (DTE).

• The strategy will ignore any option contracts with DTE below this value at the time of entry.
• It ensures you're not entering positions that are too close to expiry, which may have unstable pricing or limited liquidity.

📌 Example:

• If min_dte = 30, and the available expiries are in 10, 25, 47, and 62 days, the strategy will only consider 47 and 62-day contracts for entry.

🔢 2. nearest – Contract Ranking

This defines which contract (among those that pass the min_dte filter) will be selected.

• nearest = 1 → the closest eligible expiry
• nearest = 2 → the second closest, and so on

📌 Example:

• Using the filtered expiries above (47, 62), if:
  • nearest = 1, you'll select the contract expiring in 47 days
  • nearest = 2, you'll select the one expiring in 62 days

🔁 How It Works Together

The process at each trade entry looks like this:

1. Gather all available option expiries
2. Filter out any with DTE < min_dte
3. Rank the remaining by shortest DTE to longest
4. Pick the nearest contract in that list

💡 Why It Matters

This setup allows you to:

• Target specific expiries (e.g., always trade the 2nd monthly if it has enough time left)
• Control time decay risk by staying above a DTE floor
• Roll positions predictable, especially for structured portfolios