The Strongest Options Sup/Res Level.

How to gauge which part of options structure is the most reactive.

For a long time, I thought that the best way to utilize options price levels structures was to find overlapping ones or at least those close to each other. Well, it might not be the case after all.

Recently I started to notice something quite striking. I went back in history to check it out and confirmed that there is much better way to read the structure.

Let’s look at the April 2 options structure presented on our standard left and right charts.

What you see above is the perfect combination of the two, but the left chart is actually the most important here.

First of all structure needs to be ordered or normally distributed. That means, Max1 has to be below Max2 (or at least the same). Max0 in best case should be above both of them. Somewhere between them or close to them has to be Normal Range or Overbought. If on the right chart there is confluence with Resistance 1 or 2 - you have a perfect situation. But its rather rare. So basically Max1 below Max2, Normal Range or Overbought somewhere inbetween or close to these two is great. If right chart Resistance 1 or 2 is close to it in confluence even better.

Same applies to Min1 and Min2 and Support 1 or 2. As you can see on our chart the situation was even more rare as price ticked both sides of such perfectly aligned structure.

Perfect Resistance: Max1 → Max2 + Normal Range/Overbought/Max
Perfect Support: Min1 → Min2 + Normal Range/Oversold/Min