Ceiling and Floor
Ceiling and Floor are the nearest significant levels above and below spot.
Ceiling
The nearest significant level above spot, either sign, and the first test going up. A decisive close through moves it to the next level out.
Floor
The nearest significant level below spot, either sign, and the first test going down. A break and hold below moves it to the next level out.
The tag and the sign
A big negative strike can still carry the Ceiling or Floor tag. The tag says where the level sits; the sign says how hedging leans.
- A negative Ceiling or Floor shows in red. On flow maps hedging leans with the move there; on open interest maps it is standing inventory.
- Ceiling and Floor appear on Composite, Æther GEX and OI GEX.
Between two levels
If the two nearest large levels are both positive, one below price and one above, hedging leans against a move in either direction. That can show up as a tight range, and price can still leave it. If both are negative, hedging leans with a move in either direction. A mixed pair tells a different story, so read both signs first.
- Name the two nearest large levels and write down their signs before you plan.
- Between two positive levels, think range. Between two negative levels, think room to travel, and make the distance part of the plan.
- Room to travel is not travel: a quiet day can sit still between two negative levels. A pair is a tendency, and it changes if one level fades.
A level is a reading
A floor or a ceiling is a strike carrying size right now. Positions open and close, hedges change and options expire, so that size changes through the day.
This is an illustration, not a record. At 10:00 a ceiling sits at 605 with a large reading. By 13:00 the reading has halved as positions close. At 14:00 price trades through 605.
On another day the reading stays large and price still trades through it. On a third, price turns well short of it. A level's history tells you what the map looked like. It does not tell you what comes next.
A level starts a checklist
Work down the list before acting at a level, and write the answers down before the move starts.
- Freeze the map: note the level now, so you cannot move it later to fit the trade.
- Require a close beyond the level, not just a touch.
- Check which side of the day's average price (VWAP) price is trading on.
- Check that trading is participating, not a few thin prints.
- Write the failure rule: the price at which you are wrong and out.
These names mark places to watch. None of them promises that price will hold or turn.