Contraction Manage DTE
What it does
DTE backstop for contraction trades. Closes the position when it reaches 3 DTE regardless of profit or IV level. This is an expiration safety valve: at 3 DTE, gamma risk is extreme on short options. The mechanical engine uses 21 DTE for the same reason, but contraction enters at 7-21 DTE so the backstop is at 3 DTE instead.
When to change it
Raise to 5 if you want to exit contraction trades slightly earlier. Lowering below 3 is not recommended: gamma blowup risk increases rapidly in the final days.
Safe range
2 (aggressive, hold until near-expiry) to 7 (conservative, exit a week out).
Example
Contraction trade entered at 14 DTE. Vol has not fully normalized by the time the position reaches 3 DTE. Bot closes at 3 DTE regardless: the safety valve fires before pin and assignment risk becomes a factor.