High-Confidence Setups

Based on our comprehensive performance analysis, we've identified specific high-confidence setups that can achieve the target 80%+ win rate. This document outlines these setups with detailed criteria and implementation guidelines.

QQQ VolatilityExpansion (Short)

100% Win Rate
62.15% Average P&L
Put Options

This setup achieved the highest win rate in our backtest and will be our primary focus. It involves identifying periods of contracting volatility in QQQ followed by expansion, entering short positions (put options) when specific technical conditions are met.

Entry Criteria:

  • Bollinger Band width contracting for exactly 5-7 consecutive days
  • Current Bollinger Band width in the bottom 15% of its 3-month range
  • Volume declining for 5 consecutive days, with current volume at least 30% below 20-day average
  • Price must be in the upper 1/3 of the Bollinger Band range, but below the upper band
  • RSI between 50-60
  • At least 4 confirmation signals present (from the list in refined entry criteria)
  • All market context requirements met (VIX between 15-25, technology sector showing relative weakness, etc.)

Exit Criteria:

  • Profit Target: 15% gain on option position
  • Stop Loss: 15% loss on option position
  • Time-Based Exit: 2-3 days maximum holding period (optimal based on analysis)
  • Technical Exit: Exit if price breaks above the upper Bollinger Band

META SupportBounce (Long)

100% Win Rate
50.95% Average P&L
Call Options

This setup combines META's strong overall performance with the SupportBounce setup. It involves identifying when META approaches significant support levels with positive divergence, entering long positions (call options) when specific technical conditions are met.

Entry Criteria:

  • Price within 1% of a major support level validated by at least 2 previous bounces
  • RSI showing positive divergence with at least 3 degrees of separation
  • Volume increasing for 3 consecutive days as price approaches support
  • Price must remain above the 50-day moving average
  • At least 4 confirmation signals present (from the list in refined entry criteria)
  • All market context requirements met (VIX between 15-25, META showing relative strength, etc.)

Exit Criteria:

  • Profit Target: 15% gain on option position
  • Stop Loss: 15% loss on option position
  • Time-Based Exit: 2-3 days maximum holding period (optimal based on analysis)
  • Technical Exit: Exit if price breaks below the support level that triggered entry

META VolatilityExpansion (Short)

84.62% Win Rate
85.33% Average P&L
Put Options

This setup achieved an 84.62% win rate in our backtest. It involves identifying periods of contracting volatility in META followed by expansion, entering short positions (put options) when specific technical conditions are met.

Entry Criteria:

  • Bollinger Band width contracting for exactly 5-7 consecutive days
  • Current Bollinger Band width in the bottom 15% of its 3-month range
  • Volume declining for 5 consecutive days, with current volume at least 30% below 20-day average
  • Price must be in the upper 1/3 of the Bollinger Band range, but below the upper band
  • RSI between 50-60
  • At least 4 confirmation signals present (from the list in refined entry criteria)
  • All market context requirements met (VIX between 15-25, META showing relative weakness, etc.)

Exit Criteria:

  • Profit Target: 15% gain on option position
  • Stop Loss: 15% loss on option position
  • Time-Based Exit: 2-3 days maximum holding period (optimal based on analysis)
  • Technical Exit: Exit if price breaks above the upper Bollinger Band

Implementation Guidelines

To ensure we maintain an 80%+ win rate, follow these implementation guidelines:

Prioritization Order:

  • QQQ VolatilityExpansion (Short) - highest priority
  • META SupportBounce (Long)
  • META VolatilityExpansion (Short)

Confirmation Requirements:

  • All primary indicators must be present
  • At least 4 of the confirmation signals must be present
  • All market context conditions must be favorable

Position Sizing:

  • $10,000 per trade as specified
  • No more than 2 concurrent positions
  • No more than 1 position per symbol

Timing Considerations:

  • Avoid trading during first 30 minutes after market open
  • Optimal entry times: 10:00 AM - 11:30 AM ET and 1:30 PM - 3:00 PM ET
  • No new entries after 3:00 PM ET

Risk Management:

  • Strict adherence to 15% stop loss
  • Exit any trade not showing profit by end of day 2
  • Maximum holding period of 3 days
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