What Is AIM?
Learn where AIM originated and how ExitPoints has adapted its underlying ideas.
Learn About AIM → EDUCATION
Understand the Ideas Behind the Strategies
A systematic strategy becomes more useful when investors understand the concepts behind it.
The ExitPoints Education Center is dedicated to evergreen material explaining the trading and investment ideas that influence our research.
Explore AIM, options writing, futures hedging, risk management, and other foundations of systematic trading.
EDUCATION CENTER
Core Concepts
Writing Options
Understand option premium, why traders write options, and the risks involved.
Learn About Options →Futures Hedging
Explore how futures can be used to offset directional exposure and why hedges can change the risk characteristics of a position.
Learn About Futures Hedging →Risk Management
Learn about stop-and-reverse methods, diversification, money management, and systematic position control.
Explore Risk Management →Frequently Asked Questions
Find answers to common questions about ExitPoints, our strategies, systematic trading, and risk.
View FAQs →
WHAT IS AIM?
A System for Making Decisions as Prices Change
AIM—originally developed by Robert Lichello—was designed around a simple but important idea: investing decisions can follow a mathematical process rather than emotion.
Instead of attempting to predict exactly where a market will move next, AIM responds to changes in price and portfolio value.
The Original Idea
Traditional investors often struggle with two questions:
When should I buy?
When should I sell?
AIM was designed to provide a systematic framework for making those decisions.
As prices change, the process evaluates whether exposure should be increased, reduced, or left unchanged.
From AIM to ExitPoints
ExitPoints has taken the broader principle of systematic response and developed its own methodologies around it.
That evolution can be seen in different ways across the ExitPoints strategy family.
EP-SPACE applies AIM-oriented thinking to equity accumulation and position management.
EP-AIM uses a proprietary eleven-price ladder and stop-and-reverse methodology to manage a futures hedge throughout a weekly options campaign.
The implementations are different, but the core philosophy remains familiar:
Create the rules before emotion enters the decision.
WRITING OPTIONS
Understanding Option Premium
An option gives its buyer a contractual right while creating an obligation for the option seller, or writer.
When an option is sold, the writer receives premium.
That premium is one reason income-oriented traders may choose to write options.
Why Write Options?
Option writers may seek to benefit from the passage of time and from situations in which the underlying market remains within a favorable price range.
But premium is not free money.
The seller accepts obligations and potentially substantial risk in exchange for receiving that premium.
What Is a Straddle?
A short straddle generally involves selling a call and a put with the same strike price and expiration.
The position collects premium from both options but can become increasingly exposed when the underlying market moves significantly in either direction.
This directional exposure is one of the problems EP-AIM is designed to address through its futures hedge.
Understand the Risk
Option writing can create substantial losses.
Investors should understand contract specifications, assignment, expiration, margin requirements, liquidity, and the potential effect of large market moves before participating.
FUTURES HEDGING
Managing Exposure, Not Predicting the Future
A hedge is a position designed to offset some of the risk created by another position.
Futures contracts can be useful for this purpose because they can provide direct long or short exposure to an underlying market.
A Simple Example
Suppose an options position becomes increasingly vulnerable as a market rises.
A long futures position may offset part of that directional exposure.
If the market later reverses, the appropriate hedge may also need to change.
That does not mean the hedge eliminates risk. It changes the portfolio's exposure to that risk.
Systematic Hedging
The challenge with hedging is deciding when the hedge should be established, changed, or removed.
A systematic method establishes those rules before the decision needs to be made.
EP-AIM takes this approach by maintaining a futures hedge and using stop-and-reverse logic to respond to changing market direction.
The Important Limitation
A hedge can lose money.
In sideways or rapidly reversing markets, repeated hedge adjustments can create losses even while another part of the strategy benefits.
Hedging should therefore be evaluated as part of the complete position—not as an independent guarantee against loss.
RISK MANAGEMENT
Risk Cannot Be Removed. It Can Be Managed.
Every trading and investment strategy involves uncertainty.
Risk management is the process of deciding how much exposure to accept, how positions should be managed when markets move, and how individual trades fit within the entire portfolio.
Stop-and-Reverse
A stop-and-reverse methodology changes position direction when a predefined price level is reached.
Instead of debating whether a market move is temporary or permanent, the system follows an established rule.
EP-AIM uses this concept in managing its futures hedge.
Diversification
Different markets and strategies do not always respond to the same conditions in the same way.
Diversification can spread exposure across multiple opportunities, although it cannot guarantee a profit or prevent losses.
Money Management
A trading method is incomplete without a method for managing capital.
Position size, available capital, margin requirements, drawdown tolerance, and total portfolio exposure all matter.
The goal is not simply to identify opportunities.
The goal is to remain disciplined enough to manage the risks that come with them.
FREQUENTLY ASKED QUESTIONS
About ExitPoints
What does ExitPoints do?
ExitPoints develops, researches, and publishes systematic trading and investment strategies for futures, options, and equities.
How long has ExitPoints been developing trading systems?
ExitPoints was founded in 2003.
Does ExitPoints offer only one strategy?
No. ExitPoints is structured around a family of strategies, including EP-AIM, EP-PROFIT, and EP-SPACE, with the ability to develop additional strategies over time.
What is systematic trading?
Systematic trading uses predefined rules and processes to guide trading decisions rather than relying entirely on discretionary judgment.
Are systematic strategies risk-free?
No. A systematic process can create discipline, but it cannot eliminate market risk or guarantee profitable results.
What is EP-AIM?
EP-AIM is a futures and options methodology combining weekly short straddles with an always-in-the-market futures hedge.
What is EP-PROFIT?
EP-PROFIT is a parallel implementation of the EP-AIM methodology using a different market basket and distribution relationship.
What is EP-SPACE?
EP-SPACE is an equity strategy focused on publicly traded companies participating in the space industry.
Where can I see performance?
Performance information is available through the dedicated Performance section. EP-SPACE tracking is provided through Collective2.
Where can I learn more before choosing a strategy?
Start with the Education section and review the methodology, risks, performance information, and disclosures associated with each strategy.