01 · Direction from momentum
| Score | Direction | Classification |
|---|
| +4 | Strong Bullish | 🟢 CALL Candidate |
| +2 | Bullish | 🟡 CALL Watchlist |
| 0 | Mixed / Neutral | ⚪ No Trade |
| −2 | Bearish | 🟡 PUT Watchlist |
| −4 | Strong Bearish | 🔴 PUT Candidate |
Unlike the stock scanner (which can be set Long Only), this section never rejects negative scores — a −4 is exactly what identifies a PUT opportunity.
02 · Stock setup must qualify first
Momentum Score → Direction → Technical Setup → Entry → Stop → 2R Target → Option Contract
CALL: entry above support, stop below support, 2R target needs resistance clear above it.
PUT: entry below resistance, stop above resistance, 2R target needs support clear below it.
A qualifying score is never enough on its own — the underlying setup must clear the Swing Scanner's Minimum R:R setting before any option contract is even evaluated.
03 · Contract math
Mid Price = (Bid + Ask) ÷ 2
Contract Cost = Mid Price × 100
Spread = Ask − Bid · Spread % = Spread ÷ Mid Price × 100
Maximum Option Risk = Portfolio Value × Options Risk %
Maximum Contracts = ⌊ Maximum Option Risk ÷ Contract Cost ⌋ — never rounded up
Premium at Risk = Maximum Contracts × Contract Cost
IV vs. Historical Vol Ratio = Implied Volatility (entered) ÷ Stock's Own Annualized Volatility (already computed for stock sizing)
A ratio ≥ 1.6× means the option's implied volatility is running well ahead of how much this stock actually moves — the premium itself is rich, even on a perfectly correct directional call. That downgrades an otherwise-QUALIFIED trade to WATCH.
04 · Final status
| Status | Meaning |
|---|
| 🟢 QUALIFIED | Strong momentum (±4), a qualifying stock setup, a contract clearing DTE / liquidity / spread / risk filters, and IV that isn't run up relative to the stock's own historical volatility. |
| 🟡 WATCH | Direction is favorable but needs confirmation — a ±2 Watchlist score, a qualifying setup still missing contract details, or a contract that clears every filter except that its IV is rich (≥1.6× historical vol) relative to this stock. |
| ⚪ NO TRADE | Momentum score is 0 — no directional edge to evaluate an option against. |
| 🔴 REJECT | Stock setup fails R:R/structure, or the entered contract fails DTE, liquidity, spread, or risk-sizing filters. |
Contract data (strike, expiration, bid/ask, delta, IV, theta, volume, open interest) is entered manually from TradeZero — this scanner doesn't pull a live options feed. A ±4 score with a great chart never overrides a bad or overpriced contract, and a great contract never overrides a setup that doesn't qualify. IV and Theta are optional — the verdict works without them, but entering IV lets the scanner catch a rich premium the stock's own chart wouldn't reveal.
05 · Suggested expiration
Each card offers a starting-point expiration, not a rule:
Est. trading days to target = |2R Target − Entry| ÷ Entry ÷ 30-Day Avg Daily Move
Calendar days = trading days × cushion × 1.4 (7/5 trading-to-calendar factor)
cushion = 2× for a confirmed ±4 signal, 3× for a ±2 Watchlist signal
Clamped to your Min/Max DTE, then snapped to the nearest monthly (3rd-Friday) expiration — these small/speculative tickers usually only have real open interest on monthlies, not weeklies.
This is a heuristic starting point built from the stock's own volatility, not a fact about the option chain. Always confirm real bid/ask, volume, and open interest for that date on TradeZero before trusting it — if that monthly looks illiquid, check whether a nearby weekly serves the same setup better.