SQUEEZE MOMENTUM INDICATOR MTF HOW TO
SQUEEZE MOMENTUM INDICATOR MTF SERIES

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This is when a trader might sell some ATM calls close to expiration to complete the vertical spread.ĭo Not Sell or Share My Personal InformationĬontent intended for educational/informational purposes only. That happens when the momentum on the histogram changes color (in this case, from light blue to dark blue), indicating that the trending price action is reaching a conclusion. Then they wait.and wait.for the momentum on this trade to end. If they want to get price movement that closely mimics the underlying, the trader could look at options with a delta of at least 0.70. Decision time: Does the trader go directional or sell some premium?įor example, the trader could consider legging in to a bullish call vertical spread. In this case, with the histogram above zero, a bullish options strategy might make sense.

SQUEEZE MOMENTUM INDICATOR MTF SERIES

The first green dot after the series of red dots suggests the squeeze is on, and this market is ready to move. Past performance does not guarantee future results. The TTM Squeeze indicator alerts a trader when markets may break out of a consolidation range. The market trends until the momentum starts slowing down-a sign the trending action may be coming to an end.įIGURE 1: SQUEEZING OUT. It then starts to build up energy to shift to a trending market. The red dots along the horizontal axis indicate that the stock is “squeezing” out the last bit of consolidation from a period of sideways price action. This colorful indicator is displayed as histogram bars above and below a horizontal axis. The TTM Squeeze indicator looks at the relationship between Bollinger Bands® and Keltner Channels to help identify consolidations and signal when prices may be likely to break out (whether up or down).

SQUEEZE MOMENTUM INDICATOR MTF HOW TO

How to read the TTM Squeezeįigure 1 shows a stock price chart with the TTM Squeeze indicator displayed on the bottom pane. Luckily, there are tools on the thinkorswim® platform that can help detect when such a switch might be near. Both trades make sense.īut what if a market is about to switch from a consolidation to a full-on trend? This may be obvious in hindsight, but it could be too late. For example, the trader could buy a 0.70 delta call for an in-the-money (ITM) directional trade or sell an at-the-money (ATM) put vertical spread. If it’s trending, and the market has just pulled back to support, the trader could go either way. If it’s consolidating, the trader could consider selling some premium. To answer that question, the trader may need to know if the market is consolidating or trending. Now.does the trader go directional, or does the trader sell some options premium?

A trader has a setup that they like on an index they follow. Technical traders decide when to use delta when trading options.Technical traders examine when to apply directional options strategies and when to sell premium.The TTM Squeeze indicator can help identify when prices are likely to break out of a consolidation range.

Squeeze momentum indicator mtf