Options/Patterns Learning Diagrams

B[Form Left Shoulder BELOW VWAP] B --> C[Engineer Head: Sell More Futures → Deeper Drop BELOW VWAP] C --> D[Right Shoulder: Weak Bounce BELOW VWAP] D --> E[Trigger MA Cross Down *Above VWAP*] E --> F[Fake Break Neckline: >220% Volume] F --> G[Retail Buys Puts at High IV] G --> H[Institutions Cover Shorts + Sell Puts] H --> I[Spot Reverses → Puts Crushed] class A,B,C,D trap class E,F,G vwap class H,I action"> B[Form Left Shoulder BELOW VWAP] B --> C[Engineer Head: Sell More Futures → Deeper Drop BELOW VWAP] C --> D[Right Shoulder: Weak Bounce BELOW VWAP] D --> E[Trigger MA Cross Down *Above VWAP*] E --> F[Fake Break Neckline: >220% Volume] F --> G[Retail Buys Puts at High IV] G --> H[Institutions Cover Shorts + Sell Puts] H --> I[Spot Reverses → Puts Crushed] class A,B,C,D trap class E,F,G vwap class H,I action"> B[Form Left Shoulder BELOW VWAP] B --> C[Engineer Head: Sell More Futures → Deeper Drop BELOW VWAP] C --> D[Right Shoulder: Weak Bounce BELOW VWAP] D --> E[Trigger MA Cross Down *Above VWAP*] E --> F[Fake Break Neckline: >220% Volume] F --> G[Retail Buys Puts at High IV] G --> H[Institutions Cover Shorts + Sell Puts] H --> I[Spot Reverses → Puts Crushed] class A,B,C,D trap class E,F,G vwap class H,I action">

RULES.docx

graph TD
classDef trap fill:#fdd,stroke:#f33
classDef vwap fill:#6cf,stroke:#333
classDef action fill:#9f6,stroke:#333
classDef heading fill:#FD7921,stroke:none,font-weight:bold,color:#fff

subgraph  
    direction LR
    HEADING("H&S Trap (Bullish Reversal Fake out)"):::heading
end

A[Institutions: Sell Futures at Peaks] --> B[Form Left Shoulder BELOW VWAP]
B --> C[Engineer Head: Sell More Futures → Deeper Drop BELOW VWAP]
C --> D[Right Shoulder: Weak Bounce BELOW VWAP]
D --> E[Trigger MA Cross Down *Above VWAP*]
E --> F[Fake Break Neckline: >220% Volume]
F --> G[Retail Buys Puts at High IV]
G --> H[Institutions Cover Shorts + Sell Puts]
H --> I[Spot Reverses → Puts Crushed]

class A,B,C,D trap
class E,F,G vwap
class H,I action

graph TD
classDef pattern fill:#6f9,stroke:#333
classDef vwap fill:#6cf,stroke:#333
classDef action fill:#9f6,stroke:#333

classDef heading fill:#013E7E,stroke:none,font-weight:bold,color:#fff

subgraph  
    direction LR
    HEADING("**Successful Inverse H&S (Bullish Breakout)**"):::heading
end

A[Institutions: Buy Futures at Valleys] --> B[Form Left Shoulder BELOW VWAP]
B --> C[Engineer Head: Buy More Futures → Lower Low BELOW VWAP]
C --> D[Right Shoulder: Higher Low BELOW VWAP]
D --> E[Trigger MA Cross Up *Above VWAP*]
E --> F[Break Neckline: >220% Volume]
F --> G[Retail Buys Calls at High IV]
G --> H[Institutions Sell Calls + Hold Futures]
H --> I[Market Continues Up → Calls Profit]

class A,B,C,D pattern
class E,F,G vwap
class H,I action

graph TD
classDef trap fill:#fdd,stroke:#f33
classDef vwap fill:#6cf,stroke:#333
classDef action fill:#f96,stroke:#333

classDef heading fill:#016FE4,stroke:none,font-weight:bold,color:#fff

subgraph  
    direction LR
    HEADING("**Inverse H&S Trap (Bearish Reversal Fakeout)**"):::heading
end

A[Institutions: Sell Futures at Peaks] --> B[Form IHS Structure Below VWAP]
B --> C[Left Shoulder: Shallow Valley Below VWAP]
C --> D[Head: Engineered Low Below VWAP]
D --> E[Right Shoulder: Abnormal High Near VWAP]
E --> F[Trigger False MA Cross Up Below VWAP]
F --> G[Fake Neckline Break: Low Volume <150%]
G --> H[Retail Buys Calls at High IV]
H --> I[Institutions Sell More Futures + Sell Calls]
I --> J[Spot Collapses → Calls Expire Worthless]

class A,B,C,D,E trap
class F,G,H vwap
class I,J action

graph TD

    A[First Trough] -->|Institutional: Accumulate at support<br>Volume ↑ OI ↑| B[Reaction Peak]
    B -->|Institutional: Let shorts overextend<br>Volume ↓ OI ↑| C[Second Trough]
    C -->|Institutional: Defend support, reload longs<br>Volume ↑ OI ↑| D[Peak Breakout]
    D -->|Institutional: Ignite breakout, force covers<br>Volume ↑↑↑ OI ↓| E[UPTREND]
    classDef heading fill:#577407,stroke:none,font-weight:bold,color:#fff
    subgraph  
    direction LR
    HEADING("Double Bottom"):::heading
		end

graph TD
    A[First Peak] -->|Institutional: Distribute at resistance<br>Volume ↑ OI ↑| B[Reaction Trough]
    B -->|Institutional: Lure dip-buyers<br>Volume ↓ OI ↓| C[Second Peak]
    C -->|Institutional: Reload shorts<br>Volume ↑ OI ↑| D[Trough Breakdown]
    D -->|Institutional: Trigger stop-loss cascade<br>Volume ↑↑↑ OI ↑| E[DOWNTREND]
    classDef heading fill:#E00043,stroke:none,font-weight:bold,color:#fff
    subgraph  
    direction LR
    HEADING("Double Top"):::heading
		end

flowchart LR
classDef heading fill:#554588,stroke:none,font-weight:bold,color:#fff
    HEADING("Neckline Dynamics"):::heading
subgraph DoubleTop[Double Top Breakdown]
    A[Breakdown<br>Price breaks neckline] --> B[Impulsive Move Down<br>Shorts enter, stops hit]
    B --> C[Profit-Taking<br>Bounce from lows]
    C --> D[Throwback Rally<br>Retests neckline as RESISTANCE]
    D --> E{Test Result}
    E -- Holds --> F[Downtrend Resumes]
    E -- Fails --> G[Breakout Failure]
end

subgraph DoubleBottom[Double Bottom Breakout]
    H[Breakout<br>Price breaks neckline] --> I[Impulsive Move Up<br>Longs enter, shorts cover]
    I --> J[Profit-Taking<br>Pullback from highs]
    J --> K[Pullback Decline<br>Retests neckline as SUPPORT]
    K --> L{Test Result}
    L -- Holds --> M[Uptrend Resumes]
    L -- Fails --> N[Breakout Failure]
end

flowchart TD
    %% Define styles for different node types
    classDef default fill:#1e1e2e,stroke:#313244,stroke-width:2px,color:#cdd6f4
    classDef startEnd fill:#74c7ec,stroke:#89b4fa,stroke-width:2px,color:#1e1e2e
    classDef process fill:#94e2d5,stroke:#89dceb,stroke-width:2px,color:#1e1e2e
    classDef decision fill:#f5e0dc,stroke:#fab387,stroke-width:2px,color:#1e1e2e
    classDef market fill:#cba6f7,stroke:#b4befe,stroke-width:2px,color:#1e1e2e
    classDef effect fill:#f2cdcd,stroke:#f38ba8,stroke-width:2px,color:#1e1e2e
    classDef condition fill:#a6e3a1,stroke:#94e2d5,stroke-width:2px,color:#1e1e2e

    %% Start of the flowchart
    Start([Options Market Dynamics]):::startEnd

    %% Market Makers and Delta Hedging
    Start --> DeltaHedging
    subgraph DeltaHedging [Delta Hedging Process]
        direction LR
        DH1[Market Makers sell options]:::market
        DH2[Options have positive gamma]:::market
        DH3[Market Makers delta hedge<br>by buying/selling underlying]:::market
    end

    %% Gamma Exposure
    DeltaHedging --> GammaExposure
    subgraph GammaExposure [Gamma Exposure Effects]
        direction TB
        GE1[High Gamma = More frequent hedging]:::effect
        GE2[Low Gamma = Less frequent hedging]:::effect
    end

    %% Gamma Pinning
    GammaExposure --> PinConditions
    subgraph PinConditions [Conditions for Gamma Pinning]
        PC1[High open interest at strike price]:::condition
        PC2[Options near expiration]:::condition
        PC3[Market makers long/short gamma]:::condition
    end

    PinConditions --> GammaPinning
    subgraph GammaPinning [Gamma Pinning Process]
        direction LR
        GP1[Stock price pulled toward strike price]:::effect
        GP2[Increased hedging activity near strike]:::effect
        GP3[Reduced price volatility near strike]:::effect
    end

    %% Gamma Squeeze Path
    GammaPinning --> SqueezeConditions
    subgraph SqueezeConditions [Gamma Squeeze Conditions]
        SC1[Rapid price movement toward strike]:::condition
        SC2[Large call options open interest]:::condition
        SC3[High gamma exposure]:::condition
    end

    SqueezeConditions --> GammaSqueeze
    subgraph GammaSqueeze [Gamma Squeeze Process]
        direction LR
        GS1[Market makers buy underlying<br>to delta hedge calls]:::effect
        GS2[Buying pressure pushes price higher]:::effect
        GS3[Higher price increases delta<br>requiring more buying]:::effect
    end

    %% Gamma Acceleration
    GammaSqueeze --> GammaAcceleration
    subgraph GammaAcceleration [Gamma Acceleration]
        direction TB
        GA1[Accelerated price movement]:::effect
        GA2[Forced hedging creates feedback loop]:::effect
        GA3[Can lead to parabolic price moves]:::effect
    end

    %% Short Squeeze Path
    GammaSqueeze --> ShortSqueezeConditions
    subgraph ShortSqueezeConditions [Short Squeeze Conditions]
        SS1[High short interest in stock]:::condition
        SS2[Rising price forces short covering]:::condition
        SS3[Short covering adds buying pressure]:::condition
    end

    ShortSqueezeConditions --> ShortSqueeze
    subgraph ShortSqueeze [Short Squeeze Process]
        direction LR
        SS4[Rising price triggers margin calls]:::effect
        SS5[Shorts forced to cover positions]:::effect
        SS6[Covering creates additional buying pressure]:::effect
    end

    %% Connections between processes
    GammaAcceleration --> ShortSqueezeConditions
    ShortSqueeze --> MarketImpact

    %% Market Impact
    GammaPinning --> MarketImpact
    GammaExposure --> MarketImpact
    
    subgraph MarketImpact [Final Market Impact]
        MI1[Increased volatility]:::effect
        MI2[Abnormal price movements]:::effect
        MI3[Potential for rapid reversals]:::effect
    end

    MarketImpact --> End([End of Cycle]):::startEnd

    %% Additional stylistic elements
    class DeltaHedging,GammaExposure,GammaPinning,GammaSqueeze,GammaAcceleration,ShortSqueeze process
    class PinConditions,SqueezeConditions,ShortSqueezeConditions condition

flowchart TD
classDef heading fill:#E00043,stroke:none,font-weight:bold,color:#fff
    HEADING("Gamma Pinning"):::heading
A[Massive OI at 25,100C & 25,150P<br>Creates Gamma Pinning Zone] --> B;

subgraph B[Market Maker Hedging Feedback Loop]
    direction LR
    C[Price Rises Towards 25,150] --> D[MMs Short Puts Must SELL Futures<br>to Delta-Hedge];
    D --> E[Selling Pressure<br>Pushes Price Down];
    E --> F[Price Falls Towards 25,100];
    F --> G[MMs Short Calls Must BUY Futures<br>to Delta-Hedge];
    G --> H[Buying Pressure<br>Pushes Price Up];
    H --> C;
    
end

B --> I[Result: Price Oscillates Violently<br>Between 25,100 and 25,150];
I --> J[Creates Repeated<br>Double Tops & Double Bottoms];
J --> K[Short-Term Patterns Hit Targets<br>Within The Overall Range];

flowchart TD
    classDef heading fill:#567477,stroke:none,font-weight:bold,color:#fff
    HEADING("VWAP Pricing"):::heading
    A[5-min Bar: Close Below VWAP, High Above VWAP] --> B{Assess the Context};
    
    B --> C["Bullish Context:<br>Uptrend, Strong VWAP Slope"];
    B --> D["Bearish Context:<br>Downtrend, Weak VWAP Slope"];
    
    C --> E[Potential Bullish Pitfall<br>Wait for confirmation];
    D --> F[Potential Bearish Continuation<br>Prepare for short];

    E --> G;
    subgraph G [Wait for Confirmation]
        direction LR
        H[Next bar closes<br>BACK above VWAP] --> I[Buyers are still in control<br>Consider long entry];
        J[Next bar closes<br>further below VWAP] --> K[Sellers have won<br>Look for short opportunities];
    end

    F --> L["Strong Bearish Signal<br> reinforces the downtrend"];
    L --> M[Seek short entries on any<br>pullback towards VWAP resistance];

flowchart TD
		classDef heading fill:#567477,stroke:none,font-weight:bold,color:#fff
    HEADING("Support/Resistance Pattern vs Legacy"):::heading
    Start[Pattern Analysis Comparison] --> A
    Start --> B
    
    subgraph A[Head & Shoulders Patterns]
        A1[H&S Neckline Support]
        A2[IH&S Neckline Resistance]
    end
    
    subgraph B[Traditional S/R Methods]
        B1[Camarilla, Pivot Points, etc]
    end
    
    A1 --> C[Dynamic Support Level]
    A2 --> D[Dynamic Resistance Level]
    
    B1 --> E[Static Support/Resistance Levels]
    
    C --> F[Early Trend Reversal Signal]
    D --> G[Clear Breakout Confirmation]
    E --> H[Multiple Confluence Levels]
    
    F --> I[Measured Move Projection]
    G --> I
    
    H --> J[Well-Established Methodology]
    
    I --> K[Volume Confirmation Available]
    J --> L[Works Across Timeframes]
    
    K --> M[Pattern Advantages]
    L --> N[Traditional Advantages]
    
    M --> O[Better for reversal trading]
    N --> P[Better for range-bound markets]
    
    O --> Q[Conclusion: Both methods valuable<br>in different market conditions]
    P --> Q

flowchart TD
    %% Define styles for different node types
    classDef default fill:#1e1e2e,stroke:#313244,stroke-width:2px,color:#cdd6f4
    classDef startEnd fill:#74c7ec,stroke:#89b4fa,stroke-width:2px,color:#1e1e2e
    classDef advantage fill:#94e2d5,stroke:#89dceb,stroke-width:2px,color:#1e1e2e
    classDef timeframe fill:#cba6f7,stroke:#b4befe,stroke-width:2px,color:#1e1e2e
    classDef pattern fill:#f2cdcd,stroke:#f38ba8,stroke-width:2px,color:#1e1e2e
    classDef indicator fill:#a6e3a1,stroke:#94e2d5,stroke-width:2px,color:#1e1e2e
    classDef decision fill:#f5e0dc,stroke:#fab387,stroke-width:2px,color:#1e1e2e

    %% Start of the flowchart
    Start([Options Day Trading Timeframe Analysis]):::startEnd

    %% Timeframe Selection
    Start --> TimeframeSelection{Select Chart Timeframe}:::decision

    %% 5-Minute Chart Branch
    TimeframeSelection --> FiveMin[5-Minute Chart]:::timeframe
    FiveMin --> FiveMinCharacteristics
    subgraph FiveMinCharacteristics [5-Minute Chart Characteristics]
        FM1[Higher Noise Level]:::advantage
        FM2[More False Signals]:::advantage
        FM3[Increased Whipsaws]:::advantage
        FM4[Requires Quick Decisions]:::advantage
    end

    %% 15-Minute Chart Branch
    TimeframeSelection --> FifteenMin[15-Minute Chart]:::timeframe
    FifteenMin --> FifteenMinAdvantages
    subgraph FifteenMinAdvantages [15-Minute Chart Advantages]
        FTM1[Reduced Market Noise]:::advantage
        FTM2[More Reliable Signals]:::advantage
        FTM3[Clearer Trend Identification]:::advantage
        FTM4[Better Risk-Reward Ratio]:::advantage
        FTM5[Less Emotional Trading]:::advantage
    end

    %% Pattern Performance on 15-Minute Charts
    FifteenMinAdvantages --> PatternPerformance
    subgraph PatternPerformance [Pattern Performance on 15-Minute Charts]
        PP1[Head & Shoulders - More reliable<br>breakouts with better volume confirmation]:::pattern
        PP2[Inverse Head & Shoulders - Cleaner<br>pattern structure with fewer false moves]:::pattern
        PP3[Double Bottom - More defined<br>support levels with stronger bounce]:::pattern
        PP4[Double Top - Clearer resistance<br>identification with volume confirmation]:::pattern
    end

    %% Indicator Performance on 15-Minute Charts
    PatternPerformance --> IndicatorPerformance
    subgraph IndicatorPerformance [Indicator Performance on 15-Minute Charts]
        IP1[MA Cross - Fewer false crossovers<br>More meaningful trend changes]:::indicator
        IP2[VWAP - More reliable mean reversion<br>Better identification of value area]:::indicator
        IP3[Fib Levels - More accurate retracement<br>levels with stronger reactions]:::indicator
    end

    %% Trading Advantages
    IndicatorPerformance --> TradingAdvantages
    subgraph TradingAdvantages [Trading Advantages with 15-Minute Charts]
        TA1[Longer position holding time]:::advantage
        TA2[Reduced commission costs]:::advantage
        TA3[Better identification of option strike levels]:::advantage
        TA4[More accurate theta decay management]:::advantage
    end

    %% Pattern Reliability Comparison
    TradingAdvantages --> PatternReliability
    subgraph PatternReliability [Pattern Reliability Comparison]
        PR1[HS/IHS Patterns: 25% more reliable<br>on 15-minute vs 5-minute charts]:::pattern
        PR2[DB/DT Patterns: 30% more reliable<br>on 15-minute vs 5-minute charts]:::pattern
        PR3[Neckline breaks: 35% more successful<br>on 15-minute charts]:::pattern
    end

    %% Indicator Reliability Comparison
    PatternReliability --> IndicatorReliability
    subgraph IndicatorReliability [Indicator Reliability Comparison]
        IR1[MA Cross: 40% fewer false signals]:::indicator
        IR2[VWAP: 30% better mean reversion signals]:::indicator
        IR3[Fib Levels: 35% more accurate<br>support/resistance levels]:::indicator
    end

    %% Conclusion
    IndicatorReliability --> Conclusion
    subgraph Conclusion [Conclusion]
        C1[15-minute charts provide significant<br>advantages for options day trading]:::advantage
        C2[Better pattern recognition]:::advantage
        C3[More reliable indicator signals]:::advantage
        C4[Improved risk management]:::advantage
    end

    Conclusion --> End([End Analysis]):::startEnd

    %% Additional connection for 5-minute chart
    FiveMinCharacteristics --> End

flowchart TD
    Start[Options Trading Entry Strategy] --> Patterns{Identify Pattern Type}
    
    Patterns --> IHS[Inverse Head & Shoulders]
    Patterns --> HS[Head & Shoulders]
    Patterns --> DB[Double Bottom]
    Patterns --> DT[Double Top]
    
    IHS --> IHS_Neckline[Neckline Resistance: ₹X]
    HS --> HS_Neckline[Neckline Support: ₹Y]
    DB --> DB_Neckline[Neckline Resistance: ₹Z]
    DT --> DT_Neckline[Neckline Support: ₹W]
    
    IHS_Neckline --> IHS_Target[Target: ₹X + Head-Neck Distance]
    HS_Neckline --> HS_Target[Target: ₹Y - Head-Neck Distance]
    DB_Neckline --> DB_Target[Target: ₹Z + Bottom-Neck Distance]
    DT_Neckline --> DT_Target[Target: ₹W - Top-Neck Distance]
    
    IHS_Target --> IHS_Entry[Entry: CALL options on<br>close above neckline with volume]
    HS_Target --> HS_Entry[Entry: PUT options on<br>close below neckline with volume]
    DB_Target --> DB_Entry[Entry: CALL options on<br>close above neckline with volume]
    DT_Target --> DT_Entry[Entry: PUT options on<br>close below neckline with volume]
    
    IHS_Entry --> IHS_Risk[Stop Loss: Below right shoulder<br>Risk: 1-2% of capital]
    HS_Entry --> HS_Risk[Stop Loss: Above right shoulder<br>Risk: 1-2% of capital]
    DB_Entry --> DB_Risk[Stop Loss: Below second bottom<br>Risk: 1-2% of capital]
    DT_Entry --> DT_Risk[Stop Loss: Above second top<br>Risk: 1-2% of capital]
    
    IHS_Risk --> IHS_Manage[Manage: Take 50% profit at target<br>Trail balance with 20EMA]
    HS_Risk --> HS_Manage[Manage: Take 50% profit at target<br>Trail balance with 20EMA]
    DB_Risk --> DB_Manage[Manage: Take 50% profit at target<br>Trail balance with 20EMA]
    DT_Risk --> DT_Manage[Manage: Take 50% profit at target<br>Trail balance with 20EMA]
    
    IHS_Manage --> ConfirmIHS{Confirm with:<br>VWAP > 0.4% bullish<br>Volume > 1.5x avg}
    HS_Manage --> ConfirmHS{Confirm with:<br>VWAP < -0.3% bearish<br>Volume > 1.5x avg}
    DB_Manage --> ConfirmDB{Confirm with:<br>VWAP > 0.4% bullish<br>Volume > 1.5x avg}
    DT_Manage --> ConfirmDT{Confirm with:<br>VWAP < -0.3% bearish<br>Volume > 1.5x avg}
    
    ConfirmIHS --> FinalIHS[Enter CALL options trade]
    ConfirmHS --> FinalHS[Enter PUT options trade]
    ConfirmDB --> FinalDB[Enter CALL options trade]
    ConfirmDT --> FinalDT[Enter PUT options trade]
    
    FinalIHS --> Exit[Exit: At target or<br>if VWAP slope reverses]
    FinalHS --> Exit
    FinalDB --> Exit
    FinalDT --> Exit
    
    Patterns --> NoPattern[No clear pattern]
    NoPattern --> Wait[Wait for pattern formation<br>or price at key Fibonacci level]

flowchart TD
    A[Option Buyer's Decision Process] --> B{Identify Market Bias}

    B -- Bullish --> C[Goal: Buy OTM Call]
    B -- Bearish --> D[Goal: Buy OTM Put]

    C --> E
    subgraph E [Bullish Confirmation Analysis]
        E1[Spot Chart: IHS Pattern?]
        E2[OTM Call Strike: DB Pattern?]
        E3[Related Put Strike: Shows Weakness?<br>e.g., DT, descending trend]
    end

    D --> F
    subgraph F [Bearish Confirmation Analysis]
        F1[Spot Chart: HS Pattern?]
        F2[OTM Put Strike: DB Pattern?]
        F3[Related Call Strike: Shows Weakness?<br>e.g., DT, descending trend]
    end

    E -- All Conditions Met --> G[High-Probability BUY OTM CALL Trade]
    F -- All Conditions Met --> H[High-Probability BUY OTM PUT Trade]

    E -- Not Met --> I[WAIT: No Trade]
    F -- Not Met --> I

    G & H --> J[Execute Trade with Strict Risk Management<br>Stop Loss: Pattern Failure Level<br>Target: Measured Move from Pattern]