The Options Strike Prediction Framework
A Comprehensive Analysis of Bollinger Band Width, Market Forces, and Institutional Accumulation
February 14, 2026
Table of Contents
- 1. The Core Discovery: Bollinger Band Width & Strike Prediction
- 2. The Mathematical Foundation
- 3. The Five Market Forces Model
- 4. The Weekly Trading Cycle: The 'Hand Model'
- 5. Volume Indicators & Institutional Detection
- 6. The QUBT Case Study
- 7. Practical Applications & Strategy
- 8. Key Takeaways
1. The Core Discovery: Bollinger Band Width & Strike Prediction
The fundamental breakthrough in this framework is the discovery that the 4-standard-deviation, 10-period Bollinger Band Width directly correlates to the number of option strikes a stock could be expected to move through in a given trading week.
Figure 1.1: QUBT 6-month chart showing 4 SD Bollinger Bands and BB Width indicator at 4.86, suggesting approximately 5 strikes ($2.50) of weekly movement potential.
Key Principles:
- BB Width Reading = Expected Weekly Strike Movement: For stocks with $0.50 strike increments, a BB Width of 4.86 suggests approximately 5 strikes of movement, or roughly $2.50 in total range.
- Universal Applicability: This relationship holds across different price levels ($2, $8, $11, $13) and works for all stocks trading with $0.50 strike increments.
- Volatility-Adjusted: Higher BB Width readings indicate more strikes; lower readings indicate fewer strikes.
- Direct Translation: No complex calculations needed—the indicator provides actionable intelligence for options strategy selection.
Figure 1.2: LYFT chart showing BB Width of 11.65, predicting approximately 12 strikes ($6.00) weekly range.
Figure 1.3: BITF chart showing BB Width of 1.30, predicting only 1-2 strikes ($0.65-$1.00) weekly range—much lower volatility.
Figure 1.4: RCAT chart showing BB Width of 8.13, predicting approximately 8 strikes ($4.00) weekly range.
Practical Applications:
- Iron Condor Width: Determines optimal strike spacing for wings
- Straddle/Strangle Pricing: Identifies safe OTM distances
- Covered Call Strike Selection: Calculates probability-based safety zones
- Risk Assessment: Provides quick visual indication of premium requirements
2. The Mathematical Foundation
The framework is built on sound statistical principles that account for daily volatility and realistic directional bias over a trading week.
Core Mathematics:
- 1 SD, 10-period BB Width ≈ 1 Day's Expected Move (in strikes)
- 4× Multiplier (4 SD bands) ≈ Realistic Weekly Maximum
- 5× Would Represent Perfect Directional Streak (every day moving same direction)
Why 4× Makes Sense:
Random walk theory suggests √5 days ≈ 2.24× daily movement for pure random motion. However, with potential directional bias over a week, realistic movement approaches 3-4×. The 4× multiplier accounts for trending behavior while recognizing that stocks don't move perfectly in one direction every day—there's natural give and take.
This represents approximately 80% directional efficiency, which is reasonable for volatile stocks.
Time Horizon Limitations:
The framework works optimally for one-week predictions. Extending beyond one week would require accounting for the five competing market forces and their varying windows of influence, which introduce additional complexity and unpredictability.
3. The Five Market Forces Model
The options market is a battleground where five distinct forces compete for control. Each force operates in different timeframes and with different objectives, creating the complex price action we observe.
Figure 3.1: Cost to Close Value (CCV) diagram showing how Market Makers attempt to 'kick the field goal' through their optimal profit zone where Call CCV (blue) and Put CCV (red) curves intersect.
The Five Forces:
1. Political Policies (VIX/Rate Changes)
Macro-level shocks including Federal Reserve decisions, interest rate changes, and policy announcements. These can occur at any time and are largely unpredictable, creating sudden volatility spikes.
2. Business Insiders (Dilution/Buybacks, M&A)
Corporate insiders with material non-public information who execute structural changes to the company. These actions are often announced after hours or on weekends, catching the market off-guard.
3. Financial Institutions (Trading Floors/Ceilings)
Large institutional investors who set new support and resistance levels through accumulation and distribution. They typically operate on Tuesday, Wednesday, and Thursday when volume is lower and they can move size quietly.
4. Retail Traders (Short Squeezes/Hype Cycles)
Individual investors driven by momentum, news, and social media hype. They create volume surges, typically on Mondays, and can trigger short squeezes or sentiment-driven moves.
5. Market Makers (Options Pinning/Greek Hedging)
Market makers attempt to hedge their Greek exposure and 'pin' stocks to their maximum profit zones on options expiration (typically Fridays). They have the most control during low-volume conditions.
The CCV (Cost to Close Value) Battlefield:
Market Makers attempt to 'kick the field goal'—pushing the Friday closing price through their optimal profit zone where the most options expire worthless. This zone sits at the intersection of the Call CCV curve (rising) and Put CCV curve (declining). Success depends on whether retail selling or institutional buying overwhelms their hedging capacity.
Figure 3.2: Options calculator showing CCV analysis for BTBT at $1.74. Total CCV of $910,155 (almost all calls) suggests Market Makers want to pin below current price to maximize option decay.
4. The Weekly Trading Cycle: The 'Hand Model'
The trading week follows a predictable 5-period cycle where different market participants dominate on different days. This 'Hand Model' provides a memorable framework for understanding weekly market dynamics.
👍 Thumb Monday - Retail Trader Day
High volume as retail traders 'thumbs up' or 'thumbs down' the stock. Use the Positive Volume Index (PVI) to detect if retail hype is moving the price. Retail brings conviction and momentum but often lacks staying power.
🖕 Middle Finger Tuesday/Wednesday/Thursday - Institutional Days
Low volume mid-week period where financial institutions quietly accumulate or distribute. Use the Negative Volume Index (NVI) to detect institutional buying on down-volume days. These are the 'smart money' accumulation days.
🤙 Pinky Friday - Market Maker Day
Options expiration day where market makers attempt to 'pin' the stock to their optimal profit zone. Use Relative Volume to determine if MMs have price control. Low relative volume = MM control; high relative volume = other forces dominating.
✊ Weekend Fist - Insider Period
After-hours and weekend period when insider activity manifests. Use the 17-period TRIX versus Price Volume Trend (PVT) to detect insider accumulation or distribution patterns that may precede announcements.
Key Indicator Summary:
- PVI (Positive Volume Index): Tracks retail sentiment on up-volume days
- NVI (Negative Volume Index): Tracks institutional activity on down-volume days
- Relative Volume: Shows if market makers have control on Friday
- TRIX vs PVT: Detects insider weekend activity
- 6-period Chaikin Money Flow: Determines net directional bias based on volume and closing prices
5. Volume Indicators & Institutional Detection
Detecting institutional accumulation requires understanding how 'smart money' operates differently from retail traders. Institutions must accumulate size without triggering price moves that would make their positions more expensive.
Figure 5.1: QUBT volume indicators showing CMF at +0.16, declining PVT (retail dumping), and NVI below 60-day SMA (institutions cautious but present).
Stealth Accumulation Strategy:
Institutions employ a sophisticated approach to building positions:
- 'Kissing' the NVI 60-period line without crossing dramatically above it
- Triggering mini PVI bounces to create retail selling liquidity
- Accumulating in low-volume zones where large orders won't move price
- Avoiding high-volume shelves where buying would trigger short covering
- Staying below key psychological levels to prevent FOMO dynamics
Volume Profile Analysis:
The volume profile shows horizontal histograms indicating where volume has historically concentrated. These areas represent:
- High Volume Nodes: Strong support/resistance with many trapped traders
- Low Volume Nodes: Areas where price can move easily—ideal for accumulation
- Point of Control: The price level with the highest volume—major battleground
Confirming Institutional Accumulation:
Watch for these signals:
- NVI crossing above its 60-day SMA: Confirms sustained institutional buying
- PVI stabilizing: Retail capitulation is complete
- CMF > +0.20: Strong, sustained buying pressure
- BB Width contracting after expansion: Volatility settling as control shifts
- Large hedge fund flow spikes: Direct evidence of institutional positioning
6. The QUBT Case Study
Quantum Computing Inc. (QUBT) provides a real-time example of institutional accumulation following a strategic acquisition. This case demonstrates how the framework identifies opportunities that retail traders miss.
The Fundamental Catalyst:
January 31, 2026: QUBT completes $110M acquisition of Luminar's semiconductor engineering capabilities. This acquisition provides:
- Vertical integration for quantum chip manufacturing
- Alignment with NIST agenda to remove rare earth elements from manufacturing
- Strategic value for domestic quantum computing supply chain
- Potential government contracts and national security applications
Figure 6.1: QUBT 3-month chart showing price decline from $12 to $8.47 post-acquisition, with BB Width at 4.66 indicating potential for significant volatility.
Figure 6.2: QUBT chart with weekly Friday closing levels overlaid, showing 'bracket weaving' as different market forces compete for control each week.
Why This Matters:
Rare earth independence provides a massive competitive advantage. China controls approximately 60% of global rare earth production, making QUBT's manufacturing capabilities strategically important for U.S. interests.
The Post-Acquisition Pattern:
- Phase 1 - Anticipation Run: Price peaks around $12-13 before acquisition closes
- Phase 2 - 'Sell the News': Profit-taking begins as retail sees news as 'priced in'
- Phase 3 - Media Shakeout: Motley Fool hit pieces trigger retail panic selling
- Phase 4 - Institutional Accumulation: 30% drop to $8.47 in two weeks flushes weak hands
- Phase 5 (Current) - Stealth Accumulation: Institutions loading in low-volume zone
- Phase 6 (Upcoming) - Catalyst Breakout: Integration progress triggers move through $12 shelf
Figure 6.3: QUBT hedge fund flow showing massive 1.4M share buy spike in recent period—clear evidence of institutional accumulation while retail sells.
Current Technical Signals:
- Current Price: $8.47
- BB Width: 4.66 (suggests ~$2.30 weekly range potential)
- PVI: Declining (retail capitulation)
- NVI: 'Kissing' 60-day MA (institutions testing without triggering)
- Hedge Fund Flow: 1.4M share buy spike (smart money loading)
- CMF: +0.15 (subtle buying pressure)
- Volume Profile: Low volume at $8-9 (easy accumulation zone)
Figure 6.4: QUBT volume profile and Aroon/CMF indicators. Current price at $8.47 sits in low-volume gap (thin bars), while $12 represents major volume shelf. Aroon at 66.67 shows weakening downtrend.
Why Retail is Clueless:
Retail sees 'quantum hype bubble popped' while institutions see 'strategic semiconductor/quantum infrastructure play with government backing.' The disconnect creates the opportunity.
Key Price Levels:
- $8-9 Zone: Current accumulation range (low volume profile)
- $12 Shelf: Major volume node—breaking this triggers momentum
- $17 Target: Next major volume concentration and initial distribution zone
- $18-24 Zone: High volume distribution area where retail bought the top
Potential Upcoming Catalysts:
- Q1 earnings with integration update
- NIST partnership or contract announcement
- Rare earth manufacturing progress demonstration
- Government quantum initiative funding
- Proof of integrated semiconductor capabilities
7. Practical Applications & Strategy
The framework provides multiple ways to profit from understanding market structure and participant behavior.
Options Strategy Selection:
When BB Width is Low (1-2 strikes):
- Sell tight iron condors (market maker control)
- Sell near-the-money options for premium
- Expect range-bound behavior
When BB Width is Moderate (3-4 strikes):
- Use directional spreads based on CMF/NVI signals
- Wider iron condors with tested side hedges
- Consider straddles if catalyst expected
When BB Width is High (5+ strikes):
- Buy straddles/strangles (volatility expansion)
- Avoid short premium strategies
- Prepare for breakout through volume shelves
Timing Entry and Exit:
Entry Signals:
- NVI crossing above 60-day SMA (institutional confirmation)
- CMF > +0.20 (sustained buying)
- Price in low-volume accumulation zone
- Hedge fund flow showing large buys
- BB Width beginning to expand from compression
Exit Signals:
- Price reaching high-volume distribution zones
- NVI crossing below 60-day SMA (distribution)
- PVI spiking dramatically (retail FOMO peak)
- BB Width extreme expansion (volatility climax)
Risk Management:
- Never risk more than 2-3% of capital on any single trade
- Use BB Width to size positions (wider width = smaller position)
- Set stops at volume profile nodes, not arbitrary percentages
- Scale into positions as institutional confirmation builds
- Take partial profits at volume profile resistance levels
8. Key Takeaways
Core Framework Principles:
- BB Width = Strike Prediction: 4 SD, 10-period BB Width directly indicates expected weekly strike movement for stocks with $0.50 increments
- Five Market Forces: Politics, Insiders, Institutions, Retail, and Market Makers compete for control with different timeframes and objectives
- Weekly Hand Cycle: Monday (retail), T/W/Th (institutions), Friday (MMs), Weekend (insiders) creates predictable participant patterns
- Volume Tells the Story: PVI (retail), NVI (institutions), CMF (direction), and volume profile (battlegrounds) reveal who's in control
- Stealth Accumulation: Institutions 'kiss' support lines, accumulate in low-volume zones, and avoid triggering squeezes until positioned
The QUBT Blueprint:
The case study demonstrates how to identify institutional accumulation in real-time by combining:
- Fundamental catalyst understanding (semiconductor acquisition)
- Technical structure analysis (volume profile, BB Width)
- Participant tracking (hedge fund flows, PVI/NVI divergence)
- Market structure awareness (low volume accumulation zones)
Why This Works:
The framework succeeds because it:
- Identifies the information asymmetry between retail and institutions
- Recognizes participant behavior patterns that repeat across all stocks
- Provides quantifiable metrics rather than subjective interpretation
- Operates on one-week timeframes where variables are manageable
- Focuses on structural advantages that persist across market conditions
The Edge:
While retail traders react to news and chase momentum, this framework allows you to:
- Identify accumulation before breakouts occur
- Understand why price moves, not just that it moves
- Predict volatility magnitude for options positioning
- Recognize when to join institutions vs when to fade retail
Final Thoughts:
This framework transforms options trading from speculation into informed probability assessment. By understanding the interplay between BB Width volatility prediction, the five market forces, weekly participant cycles, and volume-based institutional detection, traders gain a structural advantage that compounds over time.
The QUBT case study shows this isn't theoretical—it's happening in real-time. Institutions are positioning for a multi-year strategic play while retail remains focused on short-term noise. The framework makes this invisible activity visible.












