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When the MACD line is rising, the implications are positive for prices: If the indicator is less than zero, the price is potentially bullish. If the indicator is greater than zero, the price is actually bullish.
When the MACD line is falling, the implications are negative for prices: If the indicator is less than zero, the price is actually bearish. If the indicator is greater than zero, the price is potentially bearish.
The signal line can be used to determine the entry or exit point. The signal line is a moving average of the MACD line. When signal line crosses MACD line and both lines are up, it is a buy signal. When signal line crosses MACD line and both lines are down, it is a sell signal.
Market makers often inflate or decrease option prices based on the volume of contracts or their perception of strike price direction. The movement in the option price sometimes has no relation to stock price, especially out of the money options. In the money option prices tend to track the stock much closer. When looking at what options to buy, we often obtain quotes on options further out in time in order to compare value. Often you will find that the current month’s option price is inflated, and you can buy another month or two of time and spend only slightly more. As a very general rule of thumb, time value on most options averages about 3/4 per month, but highly volatile, highly sought after options will be higher.
When the two lines cross and both slopes are going up, if the cross occurs below the 80 percent of the range for the prices, it’s a bullish signal. If the cross occurs above the 80 percent of the range for the prices, it’s signal of overbought and increases the chance of downtrend.
When the two lines cross and both slopes goes down, if the cross occurs above the 20 percent of the range for the prices, it’s a bearish signal. If the cross occurs below the 20 percent of the price range, it’s signal of oversold and increases the chance of an uptrend.