Indicators will differ depending on what time frame you are looking at. For short-term trades, you will want to look at the 1D 5M graph which shows the activity for the stock for the current day at 5-minute intervals. The 1D 1M time axis is typically when you want to buy and sell the option quickly and need to see the candlesticks every minute.

Basically when you see a stock is being overbought through the RSI and the MACD shows that the stock has changed from bullish to bearish (blue line crosses and goes under the yellow line) is when you want to enter into a put option. Both of these indicators

The image above shows one of my trades where I bought a put option when I saw a massive jump in the price, it was being overbought, and the MACD confirmed that the stock has switched to bearish.

For the indicators, we will be using the 1D 5M time frame as this is a good representation of how the stock will move throughout the day. The RSI indicator should be the first thing you check when analyzing a stock. When the RSI line is above the 70% line and is red, the stock is being overbought and overvalued which means "Watch this stock." The RSI indicating that the stock is being overbought shouldn't be the only reason for buying a put option. A stock could be overbought and the price could keep going up and never drop and has happened with many companies. It is important to not take any action just based off of the RSI alone. We need a second indicator which will confirm us to take action and show that the stock is about to be bearish and drop.

After you check that the stock is being overbought, you then look below your RSI to your MACD indicator. Is the blue line above or below the yellow line? If the blue line has already converged with the yellow line and the stock is bearish then it might be too late to buy a put option. If the blue line looks like it is about to converge with the yellow line and the stock is about to switch from bullish to bearish then you wait for the conversion and for the red breakout arrow to appear. This will indicate that the stock has now become bearish and will now drop. If you want to play it safe, wait for the blue line to drop lower and farther away from the yellow line before buying a put option. This will mean you will lose a small profit but your risk is reduced as the stock will not likely bounce and become bullish.

If you check the MACD and see that the blue line does not look like it is about to converge then do not buy a put option as this indicates that although the stock is being overbought (RSI), the price of the underlying stock will still keep going up. If the MACD indicator shows that the blue line is way above the yellow line, then it might not be bearish for a while and you won't have to pay much attention to the stock.

Typically you will want to check the volume of the stock and the activity as the more volume/activity a stock has, the faster your orders will be executed which is important in day trading options.

When looking at volatility, it is important to see that you are not buying an option after a spike in volatility as the contract will cost much more. When you buy a stock after a volatility spike, the volatility tends to level off after whatever news about that stock has passed and the price of your contract will lower even if the price of the underlying stock has not moved.

The date you buy for your contract to expire depends on many factors. If the indicators show a sharp increase in the RSI and the MACD looks like its converging hard in the 1D 5M time frame then you typically want a contract that expires that same week, granted you are buying this contract on Monday or Tuesday. Any day after that, it is recommended to buy the contract expiring the Friday after the current week. When looking at the 180D 4H time frame and you notice the stock is being overbought and the MACD just crossed, you would want to opt for a longer term contract, one that expires after about a few weeks or even a month. Any longer-term contracts are not recommended as they are much more expensive and are more vulnerable to time decay.

Picking the right strike point is a key decision for an options trader as it has significant impact on the profitability of an option position. The optimum strike point typically involves buying a put contract at the price of the underlying stock rounded up. For example, if $ROKU is trading at $42.67, then the strike point for your put option should round that number up which is $43. This will increase your profit to loss ratio.

Holding an option for a long time and having it near expiry reduces the amount of profit you could earn or increase any losses you have incurred. The right time to sell a put option would be when you believe that the MACD is about to converge and the blue line is about to be above the yellow line. I typically look at the 1D 5M graph as this represents the trend for the stock for the day. Any graphs that do not look at the activity over a 1D period are more long term and should be looked at when you want to swing trade an options contract rather than day trade.

Once you have bought a put option, the RSI becomes less valuable in determining when to close an option. The RSI could indicate that the stock is still being overbought but the price of the underlying stock could start increasing and become bullish. Best case scenario would be that the RSI would start indicating a drop in the stock being bought and would enter oversold or undervalued territory which drops the underlying strike price and nets you profit. Other than that, the RSI should not be used to determine when to close an option.

The MACD is the most important indicator for determining when to close an option. When the blue line looks like its about to cross the yellow line and the stock is about to be bullish again, you will want to watch the MACD carefully and try to sell your option before the two lines cross again. This happens quite often where the MACD indicates bearish movement then a few minutes later it switches to bullish and at that point, cutting your losses or taking the profit you currently have made would be the best choice as the stock price could begin climbing past your strike point.

The VWAP helps you to predict when a stock might bounce back up again. When the EMA (estimated moving average) of the stock approaches the VWAP's support line, you want to watch if it breaks the support line or bounces. If the stock bounces from the support line then the stock will begin increasing in price again but doesn't mean you should sell. The price for an underlying stock can bounce but not even reach the resistance VWAP line before dropping again and eventually breaking through the support line. The main indicator to decide when to sell a contract is the MACD.

Below shows the process of when you would buy a put option and when you would sell a put option: