Educational material, not financial advice. Nothing here is a recommendation to buy or sell any security. Options involve significant risk and are not suitable for every investor. These are past examples chosen to illustrate a reading; they are not typical results, and past behavior of any setup does not guarantee future results.
DESCRIPTION
Price fixates on a king node far away from spot with comparatively small counter-directional skew. As it trades towards the initial king node, it then selects the node above it as the new king node. If price begins to trade away from the king node, observe the changes in the values around that node’s strike. If the values of those nodes remain relatively unchanged or even increase, it suggests price may eventually trade back towards it. Mechanically, the nodes away from price tend to fade in value while the values in the direction of the trend increase in value.HOW TO APPROACH
Trend days tend to stair-step, so pullbacks are where many traders look for the trend to resume, as long as price action and the heatmap still support it. Chasing price on a trend day makes the risk harder to define.- Example 1
- Example 2
- Example 3
