Option Parameter Menus

In options analysis, you have four important one-to-many relationships. First, you have a group of symbols that have a common underlying instrument. Aspen Graphics calls these symbols an options group. Second, you have a set of options groups that comprise a strategy, which Aspen Graphics calls a strategy. As far as options trading goes, these are the two more important one-to-many relationships. Third, you have a set of strategies that comprise an options chart, and fourth, you have a set of charts that round out your trading system.

Aspen Graphics Options enables you to set and apply options parameters to any of these four one-to-many relationships. Options parameters enable you to provide specific information about particular variables in the options pricing model. These variables include interest rate information, the year type, the operative option and underlying price types, volatility type, and pricing model type.

In Aspen Graphics Options charts, you have four levels of parameters corresponding to the four one-to-many relationships. Each has a parameters menu. You access the Global Parameters menu using the .OPARAM command. You can also access the parameters menu from the Strategy and Group menus.

With the exception of the Global Parameters menu, the parameters menus permit you to apply its parameters to any higher level. This means if you display the Strategy Parameters menu, you can apply parameters to the strategy, chart, and global levels. Similarly, if you display the Group Parameters menu, you can not only set group parameters, you can also set strategy, chart and global parameters. You do this using the Scope field.

By default, the Scope field displays the word “Strategy.” This means that changes to any parameters will be applied at the strategy level. However, you are not bound by the default scope. The Scope field is a toggle. If you click on the Scope field with the left mouse key or highlight the field and press b, it changes to the next level. Selecting Done applies the parameters to the level in the Scope field.

The ability to change the Scope field enables you to change and apply perspectives quickly. Parameters cascade, that is, if you set global parameters, the global parameters you set become the default parameters for all subordinate levels. If you change chart parameters, the strategy and group parameters default to the chart parameters you set, but the global parameters remain as they are. Similarly, if you change strategy parameters, the group parameters inherit the strategy’s parameters, but the chart and global parameters remain unchanged. At the bottom of the scheme, the group parameters apply only to the group.

Given this functionality, you can save yourself a lot of time and confusion if you remember that parameters cascade. By design, the cascading parameters are particularly useful at the strategy level. By cloning a strategy and changing the Expire Adjust parameter, you can display time decay. Similarly, you can clone a strategy and display performance based on different volatility types. Most of the time, you will change parameters at the strategy level.

Because strategy parameters are so useful, the scope field in the Group Parameters menu defaults to Strategy. You can change the scope to Group. However, you will usually use the Strategy scope at the group level. As you get started using options charts, exercise caution until you get used to the flexibility that cascading parameters provides. While the ability to apply parameters across levels enables you to see the perspective you want quickly, you can loose track of what you are doing if you are not careful.