Options Workflow — Using TDL for Options Entries

Who This Is For

Options traders using TDL indicators for directional entry timing on defined-risk debit spreads, outright calls/puts, or other directional options strategies. This workflow assumes you understand basic options mechanics (calls, puts, expiration, strikes, premium).

Indicators Used

• Macro Compass — Weekly macro directional bias
• Formation Scanner — Stock selection and setup identification
• Wave Oscillator — Timing trigger for options entry
• MTF Reaction Zones — Strike selection and stop context
• Trade Execution Suite — R:R evaluation for the projected move

The Workflow

Step 1 — Macro Compass: Directional Bias

Before looking at any options, establish your macro directional bias with Macro Compass. If you are considering bullish (call) positions and Macro Compass is 4-gate bearish, this is a headwind — not a reason to skip the trade, but a reason to be selective and size conservatively.

3+ gates aligned with your direction = proceed with full process. 0–2 gates = significantly higher bar for entry; require ⭐⭐⭐ scanner setups only.

Step 2 — Formation Scanner: Stock Selection

Use Formation Scanner to identify high-scoring setups aligned with your macro bias. For options specifically, prioritize stocks with:

• Score 70+ (higher score = cleaner setup = better options R:R)
• Action = Swing (options are swing instruments, not scalp instruments in this workflow)
• Adequate liquidity: avoid very low-volume stocks where options spreads are wide

Step 3 — Wave Oscillator: Timing the Entry

Options decay (theta) means timing matters more than for stock. Wait for a Strong Buy (or Sell) diamond from Wave Oscillator as your entry timing trigger. A Strong diamond in a squeeze-release condition is ideal — compressed volatility expanding into an options position is powerful because you benefit from both directional movement and IV expansion.

Step 4 — MTF Zones: Strike Price Context

MTF Reaction Zones tell you where the market is likely to react — which directly informs your strike selection:

• For strike selection: If the next significant MTF zone is at $380 and your entry is $365, an ATM or slightly OTM call at the $370 strike captures that move with reasonable delta. A $390 strike (far OTM) requires the zone to fully break — higher risk, higher reward.
• For stop context: If your entry is at $365 and the nearest support zone is at $358, your max loss scenario is a close below $358 — this helps size the options position appropriately.

Step 5 — Trade Execution Suite: Evaluate R:R

Use Trade Execution Suite to identify the projected move from entry to TP1/TP2. Compare this to the options premium cost. Example: if the projected move from TP to TP1 is $8, and your call options cost $3.50, your options R:R is approximately 2.3:1 ($8 / $3.50 − 1). Ensure this justifies the premium paid and the time decay risk.

Key Notes for Options Trading

• Formation Scanner's daily timeframe aligns well with swing options hold periods (3–10 days). The daily scan identifies setups that typically resolve over a few days to 2 weeks — well-suited for weekly or bi-weekly expirations.
• Use expirations with enough time. For 3–10 day hold periods, use options with at least 14–21 days to expiration to avoid excessive theta decay during the hold.
• Defined-risk structures (debit spreads) are well-suited to this workflow. Formation Scanner setups have a defined entry and invalidation level — making debit spreads particularly appropriate, as you know exactly your max loss before entry.