The Top 20 Best TradingView Indicators for Options Trading
Options trading can be complex and challenging for beginners. Having the right indicators on your TradingView charts can help you better analyze the market, find trading opportunities, and make more informed decisions. In this comprehensive guide, we will explore the 10 best TradingView indicators for options traders.
Introduction to TradingView Indicators
TradingView is a powerful charting platform with a huge selection of indicators. Indicators are mathematical calculations plotted as visual overlays on your price chart. They can help you identify trends, momentum, support/resistance levels, volatility and more.
Some of the most popular types of indicators include:
- Trend indicators like moving averages and MACD
- Momentum indicators like RSI and Stochastic
- Volume indicators like On Balance Volume
- Volatility indicators like Average True Range
With so many to choose from, it can be overwhelming for new options traders to know which indicators are actually useful. The key is finding a small handful of indicators that complement your trading style and strategy.
Below are 10 of the best TradingView indicators specifically for options trading across stocks, futures and forex.
1. Relative Strength Index (RSI)
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and rate of price movements. It oscillates between 0 and 100.
Traditional RSI levels are:
- Overbought above 70
- Oversold below 30
For options trading, RSI can help you identify overbought and oversold conditions to anticipate potential reversals. It can also highlight divergences from price action.
You can use RSI to gauge market sentiment and look for trading opportunities like:
- Buy when RSI pulls back from overbought in uptrends
- Sell when RSI bounces from oversold in downtrends
RSI is one of the most popular trading indicators and a staple for options traders. Best used with other indicators to confirm signals.
2. Moving Averages
Moving averages smooth out price action and help define the overall trend. The two most common are:
- Simple Moving Average (SMA) – average price over X periods
- Exponential Moving Average (EMA) – gives more weight to recent prices
For options trading, moving averages provide dynamic support and resistance levels. You can look for opportunities when price approaches or breaks the moving average.
Some strategies with moving averages include:
- Buying calls when price breaks above EMA in uptrend
- Selling puts when price pulls back to SMA in downtrend
Moving averages work on all timeframes. Use shorter periods for swing trades and longer periods for trend trades. Popular settings are 20, 50, 100 and 200.
3. Bollinger Bands
Bollinger Bands consist of a middle band (simple moving average) with an upper and lower band plotted at standard deviations away from the middle band.
As volatility increases, the bands widen. As volatility decreases, the bands contract.
Bollinger Bands strategies for options traders include:
- Buy calls when price touches lower band in uptrend
- Sell puts when price touches lower band in downtrend
- Sell calls when price touches upper band in downtrend
- Buy puts when price touches upper band in uptrend
Bollinger Bands help determine when prices have been stretched too far and are likely to revert back to the mean. Useful for gauging overbought and oversold levels.
4. Money Flow Index (MFI)
The Money Flow Index (MFI) uses both price and volume to measure buying and selling pressure. It oscillates between 0 and 100.
- Overbought above 80
- Oversold below 20
MFI can identify divergences with price action and overbought/oversold readings. Potential trading strategies include:
- Buy calls when MFI turns up from oversold levels
- Sell puts when MFI pulls back from overbought levels
As a volume-weighted RSI, MFI is a powerful momentum indicator for confirming trend strength and spotting reversals.
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5. On-Balance Volume (OBV)
On-Balance Volume (OBV) is a simple volume-based momentum indicator. It shows when volume is flowing into or out of a security.
- Increasing OBV = volume is flowing in = uptrend
- Decreasing OBV = volume is flowing out = downtrend
OBV strategies for options traders:
- Buy calls when OBV breaks out in uptrend
- Sell puts when OBV pulls back in downtrend
Divergences between OBV and price can signal potential reversals. OBV can also be used to confirm the overall trend.
6. Average True Range (ATR)
Average True Range (ATR) measures volatility by averaging the daily price range over a set period. Higher ATR = higher volatility.
You can use ATR to size your positions. For example:
- When ATR is low, increase option size
- When ATR is high, decrease option size
ATR can also identify periods of low volatility to sell options premium. It helps adjust your trading for current market conditions.
7. Standard Deviation Channel
The Standard Deviation Channel plots bands at a set number of standard deviations above and below a moving average.
- Buy calls when price touches lower band
- Sell puts when price pulls back to lower band
- Sell calls when price touches upper band
- Buy puts when price touches upper band
Similar to Bollinger Bands, this channel helps identify overextended prices ready to revert back to the mean.
8. Volume Profile
Volume Profile shows the distribution of volume at certain price levels. It identifies key support and resistance areas.
You can use Volume Profile to:
- Buy calls near support levels
- Sell puts near support levels
- Sell calls near resistance levels
- Buy puts near resistance levels
Volume Profile is an advanced indicator but very powerful for trading options.
9. Chaikin Money Flow (CMF)
Chaikin Money Flow (CMF) measures buying and selling pressure like OBV but also incorporates volume. Positive CMF indicates money flow into a stock. Negative CMF signals money flow out of a stock.
CMF strategies:
- Buy calls when CMF turns positive after being negative
- Sell puts when CMF pulls back after being positive
- Sell calls when CMF turns negative after being positive
- Buy puts when CMF bottoms after being negative
CMF helps confirm price moves and divergences. Works well with other indicators.
10. Donchian Channels
Donchian Channels plot the highest high and lowest low over a specified lookback period. The upper band marks the highest price over the lookback period while the lower band marks the lowest price.
The area between the upper and lower band represents potential support and resistance zones. Some strategies with Donchian Channels include:
- Buy calls when price breaks above the upper band
- Sell puts when price pulls back to the lower band
- Sell calls when price drops below the lower band
- Buy puts when price breaks below the lower band
When price breaks out of the Donchian Channel, it signals a potential trend change. The bands also highlight overbought and oversold levels.
Donchian Channels work especially well for commodities and forex trading. The standard lookback period is 20 days but this can be adjusted.
Donchian Channels provide dynamic support and resistance for timing entries and exits. They identify the current trading range and breakouts. When used with other indicators like RSI, Donchian Channels can produce high-probability setups.
Some key benefits of using Donchian Channels:
- Identify support and resistance zones
- Spot potential breakouts
- Gauge overbought/oversold levels
- Generate trading signals
- Define risk levels
With their ability to adapt to changing market conditions, Donchian Channels are one of the most useful TradingView indicators for options traders. They highlight profitable opportunities in emerging trends and trading ranges.
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11. MACD (Moving Average Convergence Divergence)
The MACD is a trend following momentum indicator. It shows the relationship between two moving averages and reveals changes in the strength, direction, momentum and duration of a trend.
MACD strategies for options traders:
- Buy calls when MACD line crosses above signal line
- Sell puts when MACD line crosses above signal line
- Sell calls when MACD line crosses below signal line
- Buy puts when MACD line crosses below signal line
The crossing of the MACD line and signal line can identify trend changes early. MACD also gives trade signals and confirms trends.
12. Parabolic SAR (Stop and Reverse)
Parabolic SAR places dots above or below price to identify potential stops and reversals. The dots flip positions when the trend flips.
SAR strategies include:
- Buy calls when SAR flips below price in uptrend
- Sell puts when SAR flips above price in downtrend
- Sell calls when SAR flips above price in downtrend
- Buy puts when SAR flips below price in uptrend
SAR provides clear entry and exit points. It works well for timing trades and trailing stops.
13. Ichimoku Cloud
The Ichimoku Cloud uses multiple lines to identify support, resistance, momentum and trend direction. It offers trading signals when price crosses certain Ichimoku levels.
Ichimoku strategies:
- Buy calls when price crosses above the cloud
- Sell puts when price pulls back to the cloud
- Sell calls when price drops below the cloud
- Buy puts when price crosses below the cloud
Ichimoku Cloud defines the overall trend and highlights key breakout levels.
14. Chande Momentum Oscillator (CMO)
The Chande Momentum Oscillator (CMO) identifies overbought and oversold levels like RSI but with different scaling. It oscillates between -100 and +100.
CMO strategies:
- Buy calls when CMO crosses back above -50
- Sell puts when CMO crosses back above -50 after being below
- Sell calls when CMO drops below +50
- Buy puts when CMO crosses back below +50
CMO is useful for spotting extreme momentum and potential reversal points.
15. Commodity Channel Index (CCI)
The Commodity Channel Index (CCI) identifies cyclical trends and detects the start and end of new trends.
- CCI above +100 = overbought
- CCI below -100 = oversold
CCI strategies:
- Buy calls when CCI crosses back above -100
- Sell puts when CCI crosses above -100 after being below
- Sell calls when CCI drops below +100
- Buy puts when CCI crosses back below +100
Divergences between CCI and price can signal reversals. CCI helps confirm trend strength.
16. Linear Regression Channel
Linear regression channels plot upper and lower bands around a linear regression line. This highlights potential support and resistance levels.
Strategies include:
- Buy calls near lower band
- Sell puts near lower band
- Sell calls near upper band
- Buy puts near upper band
The linear regression line shows the overall trend direction. Channels help time entries and exits.
17. Pivot Points
Pivot points are calculated using the previous period’s high, low and close. They identify potential support and resistance levels for the current trading session.
Pivot points strategies:
- Buy calls near key support levels
- Sell puts near key support levels
- Sell calls near key resistance levels
- Buy puts near key resistance levels
Pivot points are powerful for very short term options trades. Levels can be combined with other indicators.
18. Bears Power
Bears Power measures emerging downtrends by showing the dominance of recent selling pressure. Values below zero signal bearish momentum.
- Buy puts when Bears Power drops below 0
- Sell calls when Bears Power drops below 0
Falling Bears Power indicates bearish strength. Can be combined with other indicators.
19. Bulls Power
Bulls Power identifies emerging uptrends by showing the dominance of buying pressure. Values above zero signal bullish momentum.
- Buy calls when Bulls Power rises above 0
- Sell puts when Bulls Power rises above 0
Rising Bulls Power reflects strengthening bullish momentum. Confirms uptrends.
20. Force Index
Force Index combines price and volume to identify potential trend changes and confirm the current trend.
- Increasing Force Index = uptrend
- Decreasing Force Index = downtrend
Force Index strategies:
- Buy calls when Force Index turns up from negative
- Sell puts when Force Index pulls back after being positive
- Sell calls when Force Index turns negative
- Buy puts when Force Index bottoms after being negative
Force Index helps spot trend reversals and gauge trend strength.
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Frequently asked questions
Q: What are the best indicators for options trading on TradingView?
A: There are several indicators that are considered to be the best for options trading on TradingView. Some of these include the intraday momentum index, volume indicator, volatility indicator, and strength indicator. These indicators help traders make informed decisions by analyzing market trends and providing buy and sell signals.
Q: How can I use technical indicators for options trading?
A: Technical indicators are an essential tool for options trading. They help traders analyze stock prices, market trends, and identify potential buy and sell signals. By using technical analysis tools in conjunction with other indicators, traders can make more informed decisions about when to enter or exit a trade.
Q: Can I use TradingView’s indicators for intraday trading?
A: Yes, TradingView offers a wide range of indicators that are suitable for intraday trading. These indicators can help traders analyze price movements and identify short-term trading opportunities.
Q: What is the significance of the intraday momentum index in options trading?
A: The intraday momentum index is a popular technical indicator used in options day trading. It measures the rate at which an asset’s price is changing and helps traders identify potential buy or sell opportunities.
Q: How do I choose the best indicators for intraday trading?
A: Choosing the best indicators for intraday trading depends on your trading strategy and preferences. Some popular indicators for intraday trading include moving averages, MACD, RSI, and volume indicators. It is advisable to test different indicators and find ones that work best for your trading style.
Q: Can I use TradingView’s indicators in conjunction with other technical analysis?
A: Yes, TradingView’s indicators can be used in conjunction with other technical analysis tools to enhance your trading strategy. By combining multiple indicators and analysis techniques, you can increase the accuracy of your trading decisions.
Q: Are there any specific indicators that provide buy and sell signals for options trading?
A: Yes, there are several indicators available on TradingView that provide buy and sell signals for options trading. These indicators analyze various market conditions and generate signals based on predefined criteria.
Q: How can I use trading session indicators for options trading?
A: Trading session indicators help traders identify specific periods of trading activity. By analyzing trading session data, traders can gain insights into market behavior and make more informed decisions when trading options.
Q: Can I use TradingView India for options trading?
A: Yes, TradingView India offers a wide range of indicators and analysis tools that can be used for options trading. Traders in India can access these tools to enhance their trading strategies and make more informed decisions.
Q: Are there any best options for binary trading?
A: TradingView offers a range of indicators that can be used for binary options trading. However, it is important to note that trading binary options carries its own risks and it is advisable to carefully consider your trading strategy before entering into binary options trades.
Best TradingView Indicators for Options Conclusion
There are hundreds of indicators available on TradingView. The key is finding a handful that work well for your trading style and strategy. Start with a few core indicators like RSI, moving averages and MACD. Then add additional indicators like Bollinger Bands, OBV and CCI to confirm signals.
Which TradingView indicators do you find most useful for options trading? Leave a comment below!