Directional Credit Spread Strategy For ThinkOrSwim

@agorena123 Betting against GameStop? It got rejected at 3SD? :)

WOW! looks like some penny stock action there lol. Did you do anything with that move?

I did SQ 205/200 put credit spread when it went below 2 STD yesterday and went ahead and took profit when it hit about 50% of profit potential on bounce after the sell off.
 
Last edited:

New Indicator: Buy the Dip

Check out our Buy the Dip indicator and see how it can help you find profitable swing trading ideas. Scanner, watchlist columns, and add-ons are included.

Download the indicator

Haha, nope. Since it was a penny stock I didn't make a move. But my hand was itching to buy a put option at 90$ just looking at the screen :)
 
So, I traded a couple of long call contracts of IBM at 118$ and exited at 122$. IBM gapped down after earnings, BTD showed oversold, and also was holding a monthly support level. Nice little trade testing this simple setup 😊@agorena123 Not sure if you looked at GME. It shot back up to 150$. Do you think we could filter out these kind of momentum stocks from the radar?😃
 
So, I traded a couple of long call contracts of IBM at 118$ and exited at 122$. IBM gapped down after earnings, BTD showed oversold, and also was holding a monthly support level. Nice little trade testing this simple setup 😊@agorena123 Not sure if you looked at GME. It shot back up to 150$. Do you think we could filter out these kind of momentum stocks from the radar?😃

GME today - but wait, there's more!

Good question. I primarily trade my watchlist listed earlier which typically provides a few trading ideas a week. The stocks/options from the watchlist have plenty of liquidity and narrow spreads.
 
Last edited:
GME today - but wait, there's more!

Good question. I primarily trade my watchlist listed earlier which typically provides a few trading ideas a week. The stocks/options from the watchlist have plenty of liquidity and narrow spreads.
Haha, GME is going insane. I was just going through the scan results one by one last night. On a high level, it looks like whenever the 2SD level is breached for the first time within the last 20 days they workout better. Also, non-trending stocks seem to work better than trending stocks or high momentum stocks on both sides of SD.
 
@agorena123 do you usually set up the spread on Tuesday? I did mine on SQ on Monday, 206/207, which well gives me a little hard time now. But I feel this week is exceptional.
 
@agorena123 do you usually set up the spread on Tuesday? I did mine on SQ on Monday, 206/207, which well gives me a little hard time now. But I feel this week is exceptional.

I now primarily use price breaking above/below 2STD as the trigger on Monday through Wednesday mostly, (edited to add) Thursday on some occasions if the profit potential to capital required is around the 10% area.

The scans I have alerts to 1.5 STD high and low, and I've learned to wait and see if price is going higher/lower that day which it often does. In past trades I could have gotten the same premium at wider distance.

I did do a bullish SQ put credit spread on Monday as well during the sell off as I mentioned in post #47 and closed it when it hit 50% of profit potential that same day.
 
Last edited:
Thank you @agorena123, I ended up 50% profits today.

2STD is definitely a good move, but I am also thinking about making this strategy more resilient.
What if we always play two positions per week, 1 bullish 1 bearish, and they become to the same sector.

So ideal scenario is each move in our favor.
For a market-wide move like this week, we will have 1 position that for sure hedges the loss.
 
Thank you @agorena123, I ended up 50% profits today.

2STD is definitely a good move, but I am also thinking about making this strategy more resilient.
What if we always play two positions per week, 1 bullish 1 bearish, and they become to the same sector.

So ideal scenario is each move in our favor.
For a market-wide move like this week, we will have 1 position that for sure hedges the loss.

I let the price action in my watchlist and the 2STD to determine what positions to play. This week for instance I did the SQ put credit spread, and FB and MSFT call credit spreads - 1 put credit spread and 2 call credit spreads.

The downside to the strategy is the potential loss, which is defined, but can still be large compared to the profit potential.

TheoTrade had a good video on youtube yesterday about reversion to the mean, which basically what this strategy is. But, as you saw first hand, the move isn't always over once it triggers.

My experience so far has been that I'm generally in a good price level to put the odds in my favor for a "reversion to the mean" move, but there is some trade management I'm still figuring out and welcome all comments. But the strategy does work as YTD my account is up 28%. (edit 33% after closing MSFT early today)
 
Last edited:
@agorena123
Thanks for sharing your timeframe. I have been studying upon this approach for the past several months and built a scanner. Just had problems nailing down the timeframe. How far out on expirations are you going for your strategy?
 
Search for Steve Lentz Optionvue on youtube. He has some videos with similar approach but not STD on daily charts and the monthies.
 
Thank you @agorena123.
Did you find out any good candidates this week? It seems to recover but none breaks the lines.
@yingchal there were some candidates from last week that broke the lower bands on my watchlist that were still candidates, the index ETFs and TSLA, but I did not do the put credit spread. Looking like they would have worked out, but Friday would have been better for positions and I don't like holding over the weekend.
 

Ben's Swing Trading Strategy + Indicator

I wouldn't call this a course. My goal is zero fluff. I will jump right into my current watchlist, tell you the ThinkorSwim indicator that I'm using, and past trade setups to help you understand my swing trading strategy.

I'm Interested

Join useThinkScript to post your question to a community of 21,000+ developers and traders.

Thread starter Similar threads Forum Replies Date
S Dynamic RSI Credit Spread Strategy For ThinkOrSwim Strategies & Chart Setups 2

Similar threads

Not the exact question you're looking for?

Start a new thread and receive assistance from our community.

87k+ Posts
457 Online
Create Post

Similar threads

Similar threads

The Market Trading Game Changer

Join 2,500+ subscribers inside the useThinkScript VIP Membership Club
  • Exclusive indicators
  • Proven strategies & setups
  • Private Discord community
  • ‘Buy The Dip’ signal alerts
  • Exclusive members-only content
  • Add-ons and resources
  • 1 full year of unlimited support

Frequently Asked Questions

What is useThinkScript?

useThinkScript is the #1 community of stock market investors using indicators and other tools to power their trading strategies. Traders of all skill levels use our forums to learn about scripting and indicators, help each other, and discover new ways to gain an edge in the markets.

How do I get started?

We get it. Our forum can be intimidating, if not overwhelming. With thousands of topics, tens of thousands of posts, our community has created an incredibly deep knowledge base for stock traders. No one can ever exhaust every resource provided on our site.

If you are new, or just looking for guidance, here are some helpful links to get you started.

What are the benefits of VIP Membership?
VIP members get exclusive access to these proven and tested premium indicators: Buy the Dip, Advanced Market Moves 2.0, Take Profit, and Volatility Trading Range. In addition, VIP members get access to over 50 VIP-only custom indicators, add-ons, and strategies, private VIP-only forums, private Discord channel to discuss trades and strategies in real-time, customer support, trade alerts, and much more. Learn all about VIP membership here.
How can I access the premium indicators?
To access the premium indicators, which are plug and play ready, sign up for VIP membership here.
Back
Top