Strategy & Analysis with Options Tool suite kit

NYMEX:CL1!   Light Crude Oil Futures
Today I would like to introduce you all to process of analysis step by step instruments with usage of Options Toolkit Suite. I wrote in my earlier posts what edge can give us data obtained from Options Market. So now let's jump into details and have step-by-step detailed guide. Firstly we need chart layout split to 3, as on three different timeframes we will perform analysis and monitoring for potential trade opportunities.

Process follows:
  • All starts on D1 timeframe looking for key levels - where we can check Eagle-eye view perspective. Here most important is Options Flow Sentiment indicator (at the bottom) where we look for blue background - it means equal Volume on CALL and PUT options aka Balance on market is set. From those moments in time we take close of the candle/bar - and this is our significant S/R Level. If there is level too close to another one, I skip drawing it just not to make chart too noisy.
  • Continue on D1 timeframe checking Options flow Sentiment - also looking into sentiment indicator, I check firstly for green/red background. This is self-explanatory showing advantage of Bears or Bulls camps respectively. Then I am looking where is more money on Options flow put - if green line is above red line, it means volume of CALL Options is respectively bigger than PUT ones (aka Options traders put more money on Bullish move). In reverse works the situation for Bears, where red line is above green one.
  • Check for Virgin VPOCs on M30 - I am looking for untested next day VPOC levels. Those levels are always retested by market = working like a magnet. The only question is when it will happen. It's convenient to know if multiple levels are below/above current price level in order to know the balance/pressure on the market. Also for Intraday Trading, if price passes one of Gamma Levels near VPOC, we can try to trade a move with target on Virgin VPOC.
  • Mark Demand/Supply Zone on M30 - When we see multiple Bullish/Bearish candles in row so in other words strong impulse on market, I am looking where this move began. When I identify it, first reverse candle before this impulse sets range of Zone. Ok so jumping to example: in case of strong Bullish impulse, in the place where it started I am searching for last Bearish candle before start of this impulse. This candle's High and Low are marking range of the zone. After setting up zone, I am waiting for First Retest of this Zone. In case of Demand Zone (bullish impulse) I play in case of retest Long, in case of Supply Zone (bearish impulse), I play in case of retest Short. Very often we also can observe confluence, where within Zone or in close neighbourhood we will also have present one of Gamma levels. In case of Zone fail during 1st retest, this is also major signal but in direction of breakthrough zone.
  • Intraday Setups on M15 - Gamma Levels are marking key levels for observation. In general breaking through Gamma level is a signal for potential trade with target on next Gamma Level. Very rarely are passed levels Extreme Low and Extreme High of the Day which are setting typical maximum expected range of the day. Breakthrough Gamma -1/+1 is a signal of anomaly and typical for Trend Day. So if this level won't hold, then I play in direction of breakthrough. Another setup is bounce from Gamma -/+ 0.5 which is often very strong Intraday Level. In case of observed bounce back, target of the trade is Pivot (mid between Gamma -0.25 and +0.25).
  • Additional confluence factors - I am looking not for quantity, but for quality in case of trades - that's why I take opportunities which are having in common more factors aligned in direction of trade that I plan to take. Therefore when Gamma Level is passed and I have relatively close Virgin VPOC is one additional example. Another one would be Gamma level within or in close neighbourhood of Demand/Supply Zone. Last but not least - VSA Scanner Signals. When I see before Gamma level Demand (signals below candle/bar) or Supply (signals above candle/bar), it can add me additional confluence factor or sometimes push me to avoid taking this particular trade - when I expect Bullish move but I see instead Supply signals.


AI calculated Levels based on Darkpool and Options market data
Automatic Scanner of Supply & Demand on the market - VSA Scanner with a taste of AI ;)