SOTA: Stock Options Trading Agents Guided by Option-Implied Return Distributions
On the map: LLM agents and tool use → Financial trading and forecasting agents
Abstract (arXiv)
As option markets grow and AI advances, agentic systems for option trading are gaining increasing attention. Language-model-based agents can reason over contextual information such as news, but option trading presents a particularly challenging decision problem: a single stock can have thousands of contracts, and the agent must decide both which contracts to trade and how to combine them. Existing approaches often sidestep this complexity by restricting the policy to a fixed strategy structure, such as a straddle, limiting their ability to switch strategies as market conditions change. We present SOTA (Stock Options Trading Agents), an agentic trading framework for structured option-strategy selection. SOTA abstracts the large option universe into strategy-level decisions while deterministic resolvers handle portfolio implementation. We develop SOTA by post-training Qwen3.8-27B with supervised fine-tuning followed by reinforcement learning. SOTA is evaluated on options on nine large-cap U.S. equities and SPY against rule-based and machine-learning strategy selectors in the same trading environment. Over a six-month out-of-sample period, SOTA earns an 18.3% total return with a Sharpe ratio of 1.60 and a maximum drawdown of 8.96%. We also document an asymmetric role of news: news improves frontier-teacher trajectories, but retaining news during reinforcement learning reduces out-of-sample return from 18.3% to -2.7%.
Key facts. No citing papers in the map yet (data through 7 Oct 2026). Placed in Financial trading and forecasting agents, one of 16 directions in LLM agents and tool use. Builds on 7 of its 46 references that are in the map. First posted on arXiv 7 Oct 2026.
Builds on
7 of 46 references.
Closest ancestors · 3
Same direction, newest first
- 2025StockBench: Can LLM Agents Trade Stocks Profitably In Real-world Markets?2 Oct
- 2024TradingAgents: Multi-Agents LLM Financial Trading Framework28 Dec
- 2024FinRobot: An Open-Source AI Agent Platform for Financial Applications using Large Language Models23 May
Other references · 4
- 2024DeepSeekMath: Pushing the Limits of Mathematical Reasoning in Open Language Modelscited by 8,851
- 2023FinGPT: Open-Source Financial Large Language Modelscited by 244
- 2023InvestLM: A Large Language Model for Investment using Financial Domain Instruction Tuningcited by 80
- 2021Deep Reinforcement Learning for Active High Frequency Tradingcited by 21
Built on by
Not cited yet.
Similar, not cited
Close in wording, no citation either way
- 2026LiveOption: Evaluating LLM Agents in Structured Option Trading with Nonlinear Payoffs
- 2025ATLAS: Adaptive Trading with LLM AgentS Through Dynamic Prompt Optimization and Multi-Agent Coordination
- 2025To Trade or Not to Trade: An Agentic Approach to Estimating Market Risk Improves Trading Decisions
- 2026Learning to Trade Like an Expert: Cognitive Fine-Tuning for Stable Financial Reasoning in Language Models
- 2026EvolveTrade: Experience-Driven Policy Refinement for Self-Evolving LLM Trading Agents
- 2025TradingGroup: A Multi-Agent Trading System with Self-Reflection and Data-Synthesis
- 2026MetaPS: Adaptive Programmatic Strategy Selection for Market Agents
- 2025Agent Trading Arena: A Study on Numerical Understanding in LLM-Based Agents