HomeFreeFB and TSLA 9-18-15 optionflow and harmonics

While developing the Optionflow indicator I’ll be posting examples of some setups I detected and most of them mentioned on Twitter. Not always at the exact time I place a trade, but even when I called the FB and TSLA setups today, there was ample opportunity to get into the trade on small subsequent pullbacks.

Use these posts as examples of high probability setups to trade weekly options.

FB opened up at a Bullish PRZ, and just after some 7 minutes reversed out of it while the Optionflow indicator showed increased Call buying:

That was the first opportunity to get into a trade. Call buying subsequently picked up even more, and the indicator signaled an entry for a CD leg higher; 2nd opportunity.

At that time we saw an XABCD pattern appear, where the 113%XA was perfectly inline with the PRZ of the AB=CD. Perfect place to lock in profits! and an opportunity for a Put trade. After an entry for a CD leg down showed up, right after the reversal at the PRZ. Again the 113%XA and the AB=CD PRZ of this pattern were inline around 93.80. FB bounced of this a couple of times before the end of the day.

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Similar situation with TSLA: Bullish PRZ confirmed by Bullish optionflow resulted in a trade exactly to the PRZ, where it reversed for the rest of the day.

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SPY opened up below a Bullish PRZ, and therefore not favorable for a bullish trade. Even though the indicator alerted on an entry for a possible CD leg up with target at 197.50. It reached it, but not able to get over it, and it never cleared the Bullish PRZ it opened up below.

In the afternoon an entry for a CD leg down, resulted in the day’s low just 10 cents shy of the 161.8%XA target.

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FB and TSLA 9-18-15 optionflow and harmonics — 4 Comments

  1. Nice videos, good visualization of how the indicator works. From the many signals that you get, do you only take the ones that are bigger swings than the smaller ones with option flow behind the direction? Thanks!

    • It depends on what you’re objective is. For me, since I only trade weekly options, I prefer the following:
      PRZ reversal trades of “larger” timeframes, 10,15,30min charts. And towards the end of the week, specifically on Friday I like reversal trades of smaller timeframes; 1,3,5min timeframes.
      AB=CD entry trades, specifically if the “A” is at a previous PRZ, see the examples of this Friday 9/25/15
      the optionflow is a good confirmation, and with the data I have so far, I’ve seen some good opportunities on trading one of the previous mentioned harmonic setups, when there is a strong bias on the same direction on the optionflow. Thing is, market behavior changes all the time; with high volatility, we’ll get more signals on the smaller timeframes. in periods of consolidation we’ll often see price fluctuating around both long and short CD leg entries. I’ve given a few examples of that as well. We saw that this week on Tuesday and Wednesday. But at the same time optionflow remained bearish. That’s why I recommend that you use maybe one other indicator in conjunction with harmonics.
      Hope this helps. Thx, P.

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