OPEN-SOURCE SCRIPT
ATR% Credit Spread Strike Guide
This indicator helps options traders quickly estimate the **nearest reasonable short strike area** for a credit spread using an **ATR-based distance model**.
It calculates the stock’s current **ATR%** and applies a user-defined multiple, then plots horizontal reference levels from the current price:
* **Lower Min Price** for the put side, useful when evaluating **bull put spreads**
* **Upper Min Price** for the call side, useful when evaluating **bear call spreads**
The goal is simple: instead of using a flat percentage for every stock, this tool adjusts the minimum strike distance based on the stock’s recent daily movement.
### How it works
* Uses **ATR over a selectable lookback period** (default: 20)
* Converts that movement into a percentage of price
* Applies a selectable **ATR% multiple** (1x to 4x, default: 3x)
* Draws a **horizontal line** at the current upper and/or lower threshold
* Optional labels show:
* ATR%
* Total distance %
* Current level price
### Why use it
A flat 5% rule can be too tight for volatile names and too wide for calmer names. This script gives a faster way to visualize a volatility-adjusted threshold before checking the actual option chain.
### Practical use
* Use the plotted level as the **closest strike area worth considering**
* Then confirm:
* option premium is acceptable
* return on risk meets your plan
* the strike still makes sense relative to expected move, trend, and support/resistance
### Important note
This is a **charting aid**, not a trade signal. It does not account for implied volatility, expected move, liquidity, earnings risk, assignment risk, or probability of touch. Always confirm with the option chain
It calculates the stock’s current **ATR%** and applies a user-defined multiple, then plots horizontal reference levels from the current price:
* **Lower Min Price** for the put side, useful when evaluating **bull put spreads**
* **Upper Min Price** for the call side, useful when evaluating **bear call spreads**
The goal is simple: instead of using a flat percentage for every stock, this tool adjusts the minimum strike distance based on the stock’s recent daily movement.
### How it works
* Uses **ATR over a selectable lookback period** (default: 20)
* Converts that movement into a percentage of price
* Applies a selectable **ATR% multiple** (1x to 4x, default: 3x)
* Draws a **horizontal line** at the current upper and/or lower threshold
* Optional labels show:
* ATR%
* Total distance %
* Current level price
### Why use it
A flat 5% rule can be too tight for volatile names and too wide for calmer names. This script gives a faster way to visualize a volatility-adjusted threshold before checking the actual option chain.
### Practical use
* Use the plotted level as the **closest strike area worth considering**
* Then confirm:
* option premium is acceptable
* return on risk meets your plan
* the strike still makes sense relative to expected move, trend, and support/resistance
### Important note
This is a **charting aid**, not a trade signal. It does not account for implied volatility, expected move, liquidity, earnings risk, assignment risk, or probability of touch. Always confirm with the option chain
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Difficult Takes a day, Impossible Takes a Week!
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Difficult Takes a day, Impossible Takes a Week!
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.