MOMENTUM SQUEEZE INDICATOR FULL
MOMENTUM SQUEEZE INDICATOR FREE

Squeezeline.AssignValueColor(if ExtrSqueeze then Color.RED else if originalSqueeze then Color.YELLOW else if presqueeze then Color.DARK_ORANGE else Color.black) Squeezeline.SetPaintingStrategy(PaintingStrategy.POINTS) Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.Plot s2 = ExpAverage(close, slength) - ExpAverage(close, length) ĭef Con4 = s2 = signal then Color.Cyan else if APC = 1 and s2 =0 then Color.Green else If APC =2 and s2 = 0 ĭef dn = momo LowerBandKCLow and UpperBandBB LowerBandKCMid and UpperBandBB LowerBandKCHigh and UpperBandBB < UpperBandKCHigh The strategy presented would not be suitable for investors who are not familiar with exchange traded options. If you have any questions, please send an email or leave a comment below.ĭisclaimer: The information above is for educational purposes only and should not be treated as investment advice. We hope you enjoyed this squeeze trade on META. In this example, we saw a practical application of the ratio spread in making a directional play on a stock under “squeeze” conditions.Įven if the underlying price did not move, the trade would have made money because this is a positive theta trade, pushing the T+0 line up with each passing day. However, the squeeze indicates that META may likely move more than expected. This implies that under normal conditions, based on the expected move, there is a 17% chance that META would close above $330 at expiration. The $330 short calls were at the 17 delta on the option chain. You would have made $78 on Thursday morning and $95 on Thursday afternoon.īest of Options Trading IQ How far out of the money was the short call? No, because you had to spend $38 to buy the extra protection.

Will this make the same amount at the ratio spread? And there would be a $24 loss if META is below $325 at expiration. In that case, you can buy a far-out-of-the-money long call to turn this into a broken-wing butterfly.įor example, paying $38 for a $340 call like this:

The spread contains a naked short call option and requires the highest level of option privileges, which not all accounts have. Frequently Asked Questions: Why does my broker not allow this spread? You can see this in the expiration graph when META closed at $314.69. Yet the trader would not have taken a loss but kept the profit of $13. It would have gone in the opposite direction of our thesis. META would have dropped below the price when the trade started. He would have missed the boat if the trader had waited until expiration. However, with the nice positive theta of the ratio spread, the profits increased to $131:Īnother profitable opportunity. Then, the stock started to drop during the day.īy the end of the day, the price dropped to $325. The trader could have exited at this time with about $100 of profits. On Thursday morning or Oct 12, META went up to $329: If META drops to zero, we still keep our credit of $13.50. The disadvantage of this trade is that if we are wrong in our direction and META goes down instead, we don’t lose any money. That is why if we see Meta going past $330, we must start considering exiting the trade. The drawback with this trade is that the graph does appear scary with unlimited loss if META goes to the moon. The best scenario is if META goes up to $330 but not beyond it. This is a short-term trade with only four days till expiration. In that case, the trader might use a call ratio spread with the short calls at $330: Suppose the trader thesis is that Meta will go up, but it would not likely go above $330, with $325 being its 52-week high. Previously, on Sept 27, a pin bar candle indicated that the price below $295 was being rejected.Īs added confirmation, we have positive momentum on the momentum indicator:įor some traders, this is good enough to put on a directional play for the upside move in Meta. On Oct 6, Meta closed with a bullish green breakout candle. Now, we have to decide which direction we think META is going.

MOMENTUM SQUEEZE INDICATOR FULL

However, many traders would like to get into position before the squeeze is fired to capture the move’s full potential. This means that the stock is building up energy and is about to be released (which will be indicated by the red dots turning green). It is in a “squeeze,” as indicated by the red dots of the “TTM Squeeze” indicator, which we had previously discussed.

MOMENTUM SQUEEZE INDICATOR FREE

We will be using the free built-in TTM Squeeze indicator on .Įarly October 2023, Meta is moving in a side range consolidation. In today’s example, we are looking at a squeeze trade on META.

Momentum squeeze indicator