This is a credit spreads trend following indicator designed to assist credit spreads traders in identifying trends and exploring trade ideas.
High Level Overview
It is based on a 200 period moving average line and incorporates calculations related to expected moves, which are derived from the stock's historical volatility. These calculations generate bands that may suggest possible ranges and trends. For example, the green band is one standard deviation based on historical volatility above the 200 period moving average while the red band is one standard based on historical volatility below the 200 period moving average. The grey line on the chart is the 200 period moving average. Historical volatility in this instance is calculated by looking at the last 252 candles.
How You Can Use It
You can use these bands to assist in trend analysis. For instance, if the stock is above the green line, the stock typically appears to be bullish. If the stock is below the red line, the stock typically appears to be bearish. When the market is between the red line and green, the stock trends to be sideways. With this information on the trend, it can assist you in coming up with credit spread trade ideas (put credit spread = bullish and call credit spread = bearish). The credit spread trade ideas table on the chart will show case a potential trade idea based on the percentage out of the money you want to place the trade (this is set in your settings).
This indicator has taken me 6 years to build, so I hope you enjoy it :)
Algorithm breakdown
Above the green line: bullish trend
Below the red line: bearish trend
Between the red and green line: sideways market
Above the top yellow line (optional): overbought market
Below the bottom yellow line (optional): oversold market
Understand The Settings
Plot breakout arrows?: shows arrows when the stock crossed one of the major lines
Show standard deviation high and low: shows where the market will top out and bottom out (mathematically)
SMA length: the length of the midline which is a simple moving average indicator
Show credit spreads recommendation: gives you trade ideas based on the stock's trend
Percentage out of the money: how far the recommended trade idea is out of the money
Keep in mind, this indicator may serve as a tool for potential trend identification and generating credit spread trade concepts, but it's essential to conduct your research and exercise due diligence beforehand.
リリースノート
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Fix the input fields to be labeled correctly (there was two upper lines instead of one upper and one lower)
Fix the call credit spread ideas to show levels above the stock, not below
リリースノート
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Add a 10 period moving average to the indicator with a band around it. The lower band is .97 x the moving average value. The upper band is 1.01 x the moving average value. The moving average length can be changed in the settings and hidden.
This is being added upon change of the strategy and request from current users.
I love the Script! Thank you for sharing!! Would you mind sharing the source code or possibly editing it so we could modify it for 0 DTE and allow different timeframes?
jaredradosevichffl
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is there a answer on the time questions? I do Odte on the 15 min chart so please lmk
Bmiros
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What chart timeframe is optimal for this indicator? Thank you so much for all your hard work on this indicator.
osutai
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Love how simple to understand. Any way to customize the indicator to 7dte and 0dte?
RTX33
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Will be trying this out. Thanks.
dporschet
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Just downloaded the indicator and ran it on SPY and the recommedation is to run a call credit spread, but it says to sell the $413 and buy the $414. The current price is $425. It seems like the calculation is backwards.