Institutional MF-Vol Compression Scanner v4.0 [BIG]

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BIG COMPRESSION SCANNER v4.0
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OVERVIEW

The BIG Compression Scanner v4.0 is a proprietary volatility regime detection system designed for systematic Daily options deployment. This framework identifies pre-expansion volatility compression zones through multi-dimensional market structure analysis, combining institutional positioning patterns with hierarchical timeframe confirmation and options market structure to generate high-conviction directional signals for premium strategies.

The methodology synthesizes volatility dynamics, liquidity flow patterns, and cross-timeframe regime alignment into a probabilistic scoring system that isolates asymmetric risk-reward setups characteristic of compression-to-expansion transitions. The framework is calibrated specifically for 30-45 DTE options strategies where timing precision and volatility environment assessment are critical to edge generation.


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CORE METHODOLOGY
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• Proprietary Compression Detection

The system employs a multi-factor compression identification framework that monitors volatility regime transitions across price dispersion metrics and range contraction patterns. Unlike single-indicator squeeze systems, this methodology uses weighted ensemble logic to distinguish true pre-expansion compression from random consolidation noise.

Compression strength is quantified through a proprietary scoring algorithm (0-100%) that evaluates:
- Statistical volatility contraction relative to historical norms
- Price range compression within dynamic envelope systems
- Institutional volume signature analysis during low-volatility periods
- Cross-timeframe compression alignment (Daily/Weekly/Monthly hierarchy)

The framework filters compression events based on minimum strength thresholds and multi-bar confirmation to eliminate premature signals characteristic of retail squeeze indicators.


• Hierarchical Multi-Timeframe Architecture

The indicator integrates a three-tier temporal analysis structure where higher timeframes constrain and validate lower timeframe signals:

Strategic Layer (Monthly) – Establishes macro directional bias and identifies structural market positioning. This layer determines whether intermediate trends align with or counter dominant regime dynamics.

Structural Layer (Weekly) – Provides tactical context through key price levels, momentum assessment, and volatility regime confirmation. Weekly analysis filters signals that would occur in unfavorable proximity to structural inflection zones.

Execution Layer (Daily) – Generates precise entry timing through intraday regime shift detection, momentum confluence analysis, and institutional flow pattern recognition.

Each layer contributes weighted influence to the composite directional probability model, with recalibration logic that adjusts timeframe importance based on current market regime characteristics. The exact weighting algorithm is proprietary and adapts to volatility environment dynamics.


• Options Market Structure Integration

Version 4.0 incorporates options-specific market intelligence not available in standard technical analysis frameworks:

Volatility Environment Assessment – The system continuously monitors implied volatility regime characteristics through proprietary estimation models. These models identify whether current premium levels favor buying or selling strategies, adjusting signal generation accordingly.

Temporal Decay Awareness – Built-in expiration cycle logic ensures signals only trigger when sufficient time value remains for thesis development. The framework approximates days-to-expiration and applies minimum threshold filters to prevent entries in high theta decay regimes.

Greeks-Aware Targeting – Price targets are dynamically calibrated based on volatility expansion expectations and estimated leverage characteristics. Target multipliers adjust to current options market structure rather than using fixed risk-reward ratios.

Premium Environment Classification – Signals are enhanced with real-time assessment of whether current volatility levels favor long premium, short premium, or spread strategies based on historical percentile analysis.


• Probabilistic Directional Scoring System

Rather than binary bullish/bearish classification, the framework generates probability-weighted directional bias through a proprietary multi-factor model. This model synthesizes trend alignment metrics, momentum characteristics, structural positioning, and institutional flow signatures into normalized probability distributions.

The scoring system evaluates dozens of market structure variables across multiple timeframes, applies regime-dependent weighting, and produces directional probabilities that reflect actual edge rather than arbitrary technical indicator thresholds. Signal generation occurs only when directional probability exceeds user-defined conviction thresholds (55-65% depending on sensitivity setting).

This probabilistic approach allows traders to calibrate position sizing and strategy selection (outright vs. spreads) to the strength of directional conviction rather than treating all signals as equal weight.


• Institutional Flow Detection

The framework monitors volume and price interaction patterns characteristic of institutional accumulation or distribution during compression phases. This analysis identifies whether compression zones contain building directional positions (high probability of sustained move post-breakout) versus thin, choppy consolidation (high false breakout risk).

Flow detection employs proprietary algorithms that distinguish genuine institutional activity from retail volume spikes, providing critical context for signal validation.


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SIGNAL ARCHITECTURE
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Call Option Signals trigger when compression strength, directional probability, timeframe alignment, options market structure, and institutional flow patterns simultaneously satisfy proprietary threshold criteria. Signals are filtered against weekly structural levels to avoid low-probability entries near major resistance zones.

Put Option Signals follow equivalent logic with inverse directional parameters, ensuring symmetrical framework application across bull and bear setups.

All signals include:
- Directional conviction probability (percentage)
- Current volatility environment assessment (IV Rank proxy)
- Dynamic price target based on expansion expectations
- Multi-timeframe alignment status

Signal cooldown logic prevents excessive signal generation during extended consolidation periods, maintaining signal quality over quantity.


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VISUAL INTELLIGENCE
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Real-Time Multi-Timeframe Dashboard

The top-right panel provides continuous visibility into:
- Trend alignment across Daily/Weekly/Monthly timeframes
- Current compression status at each temporal layer
- Momentum regime characteristics (RSI values)
- Options environment assessment (IV Rank, optimal strategy)
- Composite signal readiness (compression strength percentage)

This dashboard enables rapid regime assessment without manual multi-timeframe chart analysis.

Chart Integration

Visual overlays include:
- Volatility envelope systems (dynamic bands)
- Weekly structural price levels (pivot, resistance, support)
- Compression zone highlighting (background shading)
- Active squeeze indicators (Daily and Weekly differentiation)

Signal Labels

When setups trigger, comprehensive labels display:
📈 CALL OPTION
Prob: XX%
IV Rank: XX%
Target: $XXX.XX

Labels provide all critical execution information without requiring dashboard consultation.


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KEY CAPABILITIES
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- Proprietary multi-factor compression detection with adaptive thresholds
- Hierarchical multi-timeframe confirmation (Daily/Weekly/Monthly)
- Options-specific filters (IV regime, DTE requirements, Greeks awareness)
- Probabilistic directional scoring (0-100% conviction levels)
- Institutional flow pattern recognition during compression
- Weekly structural level integration with proximity filters
- Dynamic target calibration based on volatility expansion expectations
- Real-time multi-timeframe regime dashboard
- Customizable sensitivity and threshold parameters
- Non-repainting signal architecture (bar close confirmation)
- Comprehensive alert system for proactive monitoring


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APPLICATION GUIDELINES
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1. Timeframe Selection
Apply to Daily (D1) charts only. Framework calibration is timeframe-specific; other intervals produce suboptimal results.

2. Options Mode Activation
Enable Options Trading Mode for premium strategy optimization. This activates IV filtering, DTE thresholds, and Greeks-aware targeting.

3. Strategy Calibration
- Premium Buying: Set IV threshold to 50th percentile, DTE minimum 30+ days, target multiplier 2.5-3.0×
- Premium Selling: Set IV threshold to 70th+ percentile, DTE minimum 20-30 days, target multiplier 1.5-2.0×

4. MTF Dashboard Monitoring
Verify multi-timeframe alignment before execution:
- Ideal setup: Daily + Weekly compression both active
- Confirm trend alignment across timeframes
- Check IV Rank for premium environment assessment
- Wait for "READY" status (green) indicating threshold satisfaction

5. Signal Execution
When labels appear:
- Review directional probability (target >65% for high conviction)
- Assess IV environment (low IV favors buying, high IV favors selling)
- Use price target for strike selection and profit objectives
- Consider 30-45 DTE options for thesis development time

6. Risk Management
- Position size: 2-5% options capital per signal
- Stop loss: Exit if compression breaks opposite direction without follow-through
- Time stop: Reassess if position stagnant after 5-7 days
- Profit taking: Scale out at provided targets or weekly pivot levels

7. Sensitivity Adjustment
- High (55%): More signals, lower conviction, diversified approach
- Medium (60%): Balanced, default setting (2-4 signals/month typical)
- Low (65%): Fewer signals, higher conviction, concentrated positions


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FRAMEWORK LIMITATIONS
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- Optimized exclusively for Daily timeframe analysis
- Compression development requires patience (2-4 weeks typical)
- IV metrics are proprietary proxies, not direct exchange data
- Greeks estimations approximate actual options contract characteristics
- DTE calculations simplified vs. precise monthly expiration dates
- Multi-timeframe filtering reduces but cannot eliminate false breakouts
- Requires liquid options markets (tight spreads, adequate open interest)
- Not designed for earnings-driven volatility events (IV crush risk)
- Framework identifies timing, not specific strike or expiration selection


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TECHNICAL SPECIFICATIONS
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- Pine Script v5 architecture
- Non-repainting signal confirmation (bar close validation)
- Multi-security data integration (Weekly/Monthly via request.security)
- Real-time multi-timeframe analysis dashboard
- 4 alert conditions (Call/Put options, directional generic)
- Fully customizable parameters (compression, scoring, filters, visuals)
- Professional-grade visual hierarchy and information density


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PROFESSIONAL CONTEXT
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This framework is designed for systematic options traders with working knowledge of:
- Volatility regime dynamics and expansion/contraction cycles
- Options Greeks and their impact on P&L across various market conditions
- Implied Volatility Rank interpretation and premium pricing assessment
- Multi-timeframe analysis methodology and trend hierarchy
- Risk-adjusted position sizing and portfolio construction principles

The system identifies when market structure favors options deployment but does not prescribe how to construct positions. Strike selection, expiration choice, spread architecture, and position sizing require independent trader judgment based on account parameters and risk tolerance.

Optimal deployment combines this framework with:
- Options analytics platform (actual IV, Greeks, probability calculations)
- Earnings calendar awareness (pre-earnings IV inflation vs. post-earnings crush)
- Broader market regime context (VIX, correlation, sector rotation)
- Portfolio-level risk management (concentration limits, correlation analysis)


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Proprietary compression-to-expansion framework for systematic Daily options deployment. Methodology incorporates multi-dimensional volatility analysis, hierarchical timeframe confirmation, and options market structure intelligence.