The brilliant Dr. Harlin shared a code snipped of something he calls FV%, explained here https://x.com/TailThatWagsDog/status/1936770428036321368
I think it would be great to use the premise of FV and apply it to the price area of a chart (specifically an options contract) and when FV is -ve, the candle colors print (any color). This would visually provide confirmation if at that time the contract is below fair value (according to the math in provided in Harlin's codebase)
The one condition i would add would be to only paint the -ve candles if its both below vwap AND the implied volatility of the underlying is above (puts) or below(calls) its mean. Example being if an call option's IV is approaching 90% and a FV is met, the candle wouldn't paint. But if the same call option's IV is below 50% and rising and a fv trigger is met, then the candle paints. Theory is as IV expands, premiums do too and the FV candle can be a visual trigger to look for entries long.
I think the best use case is on short-dated options (0-7dte) and only changing candles when FV is -ve.
Thanks!!
I think it would be great to use the premise of FV and apply it to the price area of a chart (specifically an options contract) and when FV is -ve, the candle colors print (any color). This would visually provide confirmation if at that time the contract is below fair value (according to the math in provided in Harlin's codebase)
The one condition i would add would be to only paint the -ve candles if its both below vwap AND the implied volatility of the underlying is above (puts) or below(calls) its mean. Example being if an call option's IV is approaching 90% and a FV is met, the candle wouldn't paint. But if the same call option's IV is below 50% and rising and a fv trigger is met, then the candle paints. Theory is as IV expands, premiums do too and the FV candle can be a visual trigger to look for entries long.
I think the best use case is on short-dated options (0-7dte) and only changing candles when FV is -ve.
Thanks!!
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