OPEN-SOURCE SCRIPT
Opcje: Sugestia Strike'ów (HV Based)
How to interpret this script?
1. Dotted Lines:
Red (Upper): The price level above which the asset is statistically unlikely to rise within X days. This is where you look for a Strike Price to sell a CALL option (Short Call).
Green (Lower): The price level below which the asset is statistically unlikely to fall. This is where you look for a Strike Price to sell a PUT option (Short Put).
2. Sigma Multiplier (Important!):
The default setting is 2.0. This represents 2 Standard Deviations.
In a normal distribution, 2 standard deviations cover approximately 95% of outcomes.
This means you theoretically have a 95% probability that the option will expire worthless (meaning you keep the full premium), but the premium received will be lower.
If you change it to 1.0, you will be closer to the current price = higher premium, but the risk of assignment (exercise) increases to about 32%.
3. DTE (Days to Expiration):
Enter the actual number of days for the option you intend to sell (e.g., 45). The script will calculate where the price might be in 45 days based on current volatility.
1. Dotted Lines:
Red (Upper): The price level above which the asset is statistically unlikely to rise within X days. This is where you look for a Strike Price to sell a CALL option (Short Call).
Green (Lower): The price level below which the asset is statistically unlikely to fall. This is where you look for a Strike Price to sell a PUT option (Short Put).
2. Sigma Multiplier (Important!):
The default setting is 2.0. This represents 2 Standard Deviations.
In a normal distribution, 2 standard deviations cover approximately 95% of outcomes.
This means you theoretically have a 95% probability that the option will expire worthless (meaning you keep the full premium), but the premium received will be lower.
If you change it to 1.0, you will be closer to the current price = higher premium, but the risk of assignment (exercise) increases to about 32%.
3. DTE (Days to Expiration):
Enter the actual number of days for the option you intend to sell (e.g., 45). The script will calculate where the price might be in 45 days based on current volatility.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.