ACV Options Strategy

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ACV Strategy Rules

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Parameters and Sizing

  • DTE 180+
  • Put credit and Call credit spreads are used
  • Strikes nearest $600 credit and $200 debit ($0.60 for /CL and $6.00 for /GC)
  • Technical display for daily chart
    • EMA’s – 8, 13, 21, 34 and 55 (tip: use colors of the rainbow or color shading to quickly identify the order)
  • Positions held
    • Bearish momentum = 1 call credit spread
    • Bullish momentum = 1 put credit spread
    • Neutral = 1 call credit spread, 1 put credit spread

Determining direction and opening/closing positions

  • When EMA’s line up bullish (8>13>21>34>55), sell 1 put spread
    • Bullish exits:
      • Profit target – close and open new put spread at 75% profit target of credit
      • Stop loss – close and open new put spread at 200% loss of credit received
  • When EMA’s don’t line up in order enter 1 call spread and 1 put spread.  If you already have a put or call spread on due to precious bullish/bearish stance, keep this on and add the other side.
    • Neutral exits:
      • Close and open new call or put spread at 75% profit target of credit received
      • Close and open new call or put spread at 200% loss of credit received
  • When EMA’s line up bearish (55>34>21>13>8), sell 1 call spread.
    • Bearish exits:
      • Profit target – close and open new call spread at 75% profit target of credit
      • Stop loss – close and open new call spread at 200% loss of credit received
  • When moving from any of the 3 directions above (bullish, neutral, bearish), close/open appropriate spreads to get to desired position.
    • Example moving from neutral to bullish:
      • Neutral: 1 call spread + 1 put spread
      • Action: close 1 call spread

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Working out Sizing

  • Traders should study these rules and back test themselves to gain an understanding of the strategy
  • One’s drawdown allowance (DDA) may be divided by the MDD to get the position multiple (a.k.a. Number of units). 
  • E.g. One’s drawdown allowance for a strategy might be $5,000 and the MDD might be $1,100. So they would take $5,000 DDA / $1,100 MDD  to get 4.5 Unit Multiplier. 
  • The number of spreads/contracts may be multiplied by this value to get the target sizing.

Not a recommendation. Provided for education and information purposes only. All trades are hypothetical. See other important disclosures at formafinancial.com/disclosures. 

Valid Ranges

Although we share and track one specific targeted trade structure, our studies show that using a range of parameters as described below provides substantially similar returns while allowing the freedom to target a specific trade that is most suitable to each individual. 

  • Expiration Dates: Between 120 and 250 DTE. Nearer dated expiration cycles may provide higher returns with increased volatility. Longer dated expiration dates may reduce volatility and reduce over all returns as well. 
  • Short Strikes: 8 to 12 Delta
  • Long Strikes: Approximately half of the Delta as the Short Strike (e.g. if you select .12 Delta for the short strike, then the long should be the closest available to .06 Delta)

If the Current Position shown falls within these Delta ranges (or higher), then the entry is still valid even if you are getting in late. If the current Delta of the strikes in the Current Position is far below this range, then the risk/reward of a late entry is less favorable. 

If you have any questions or need further clarification, please send a message in the chat.

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History *

Overview

The ACV trading strategy is a hybrid model for momentum and market neutral income. It is deployed in the options on Gold futures (symbol GC) and Crude Oil futures (CL).

* Please note that all trades are computer simulated. We have done our best to estimate market factors such as commissions and liquidity, however all computer simulations and even historic live trading cannot fully account for variations in commission rates, liquidity issues, and slippage. Please review other important disclosures.

Statistics

0 %
Annual Return on Allocation
0 %
Annual Ret/Margin
7 %
Max Drawdown
0
aRet/MDD
0 %
Win Rate
$ 100
Minimum Allocation
100
Trades
100
Average Hold

How The Strategy Works

  • Defined risk on every trade. There are no naked options, no short futures, or any other form of unlimited risk type of trades.
  • Momentum priority. The dominant trend and momentum of the market is always respected so that we can benefit from long lasting trends and avoid being on the wrong side of market crashes.
  • Income over home runs. We opt to see income from positive Theta rather than catching giant returns from long premium. This allows for far more consistent returns while giving up only a small amount of long term upside. 

Strategy Team

Garrett Drummond

Funded trader in the Falde Funded Trading program and designer of the ACV strategy.

Andrew Falde

Adviser and manager for prop firm, fund, and individual clients. Founder of Falde Capital Management and Falde Trading.

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