The Ace Program

An Encyclopedia of Options Strategies



Think about it… As a trader, you establish positions because you have expectations for how a market will behave.

If you’re bullish, for example, you must select from a finite number of possible bullish positions. In other words, you can buy a futures contract, buy a call, initiate a debit call spread, sell a put, and so on.

Likewise, if you have no opinion about market direction or if you don’t want your opinion to affect trade selection, you need to choose from a variety of delta neutral positions.

So the question is
“What are my choices for positions and how should I choose among them?”

 

The ACE Program helps you answer this vital question.

The ACE Program is your indispensable reference guide covering positions for five different market scenarios (very bearish, bearish, neutral, bullish, and very bullish) and for three different volatility environments (increase, stay the same, or decrease).

Most importantly, The ACE Program identifies the option expiration month(s) that are appropriate to use given the volatility environment, your market outlook, and your tolerance for risk.

You first Assess the character of a market by determining if it’s trending or moving sideways and if its options are expensive or cheap.

The ACE Program then helps you Choose an options strategy using the appropriate option expiration month that fits your market assessment and shows you how to structure an options position with the appropriate strike prices.

You’ll see, for example, a Graphic Analysis for a Call Ratio Backspread using calls that expire in the front-month as well as a Graphic Analysis for Call Ratio Backspreads using calls that expire in each of the next two deferred months. Each Graphic Analysis is a picture showing how an options position will perform over time and over a range of prices.

That way, you see the impact and the precise differences that market movement, time decay, and implied volatility have on each spread’s performance. In addition, you’ll see the margin for each position.

The last step is to Execute a specific trading plan to manage the position.

In short, The ACE Program guides you towards making informed trading decisions using objective criteria.

The ACE Program consists of Strategy Tables for 53 different options strategies as well as detailed Graphic Analyses for 191 options positions.. All examples in The ACE Program use S&P 500 options for purposes of comparison; however, the trade structures are applicable for whatever markets you want to trade.

You use the Strategy Tables and Graphic Analyses to answer the most important questions facing you as a trader:

  • What types of positions are appropriate given my expectations for market direction and implied volatility?
  • How are my trade strategies affected if implied volatility rises, if it remains unchanged, or if it declines?
  • Which option expiration month should I use? In other words, if I make my trade using front month options as opposed to deferred month options, how are delta, implied volatility and time decay affected?
  • Which positions can earn the greatest profit?
  • Which positions require the least amount of margin?
  • Which positions have an attractive ratio of profit to margin over a specific time period and range of underlying prices?
  • Which positions can lose the least over a specific time period and range of underlying prices?
  • Which positions have the highest probability of profit?