Overview
The 9 EMA and 20 EMA are used in this framework as trend and momentum context, not as mechanical entry signals.
Their purpose is to help answer one question before selling a credit spread:
Is the market environment supportive of selling premium on this side?
When used correctly, the 9/20 EMA relationship helps filter out low-quality trades and avoid fighting short-term momentum.
Why the 9/20 EMA
The 9 and 20 exponential moving averages respond quickly enough to reflect current price behavior, while still smoothing noise.
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9 EMA reflects short-term momentum
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20 EMA reflects short-to-medium trend bias
Together, they help identify:
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Directional bias
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Trend strength
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Pullbacks vs breakdowns
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When not to sell premium
Core Principle
I do not trade because price touches an EMA.
I trade when:
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Price behavior relative to the 9/20 EMA supports the probability of the spread expiring worthless.
The EMAs provide permission, not a trigger.
Bullish Context (Put Credit Spreads)
Conditions
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9 EMA above 20 EMA
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Both EMAs sloping upward
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Price holding above the 20 EMA
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Pullbacks respect the 20 EMA or quickly reclaim the 9 EMA
Interpretation
This indicates:
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Buyers are in control
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Pullbacks are being absorbed
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Selling puts aligns with short-term trend pressure
Action
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Favor put credit spreads
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Place short strikes below structure, not just below the EMAs
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Avoid selling puts during sharp extensions away from the EMAs
Bearish Context (Call Credit Spreads)
Conditions
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9 EMA below 20 EMA
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Both EMAs sloping downward
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Price holding below the 20 EMA
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Rallies stall near the 9 or 20 EMA
Interpretation
This suggests:
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Sellers control momentum
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Rallies are corrective
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Selling calls aligns with downside pressure
Action
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Favor call credit spreads
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Place short strikes above resistance, not just above the EMAs
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Avoid selling calls into capitulation moves
Neutral / No-Trade Context
Warning Signs
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9 and 20 EMA are flat and intertwined
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Frequent EMA crossovers
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Price chopping through both averages
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Strong news-driven volatility
Interpretation
This is low-quality environment for directional credit spreads.
Action
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Reduce size
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Wait for clarity
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Skip trades entirely if needed
No trade is better than a forced one.
EMA Pullbacks vs EMA Breaks
Pullbacks
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Price pulls into the 9 or 20 EMA
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Holds structure
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Resumes trend direction
These are acceptable environments for selling premium.
Breaks
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Clean closes through the 20 EMA
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Follow-through beyond the EMA
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Loss of prior structure
These invalidate the original bias and require reassessment.
Timeframe Considerations
This strategy is timeframe-agnostic, but context matters:
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Daily chart: Primary bias for 14–45 DTE trades
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Intraday (5–15 min): Tactical context for SPX 0DTE only
I avoid mixing signals across timeframes without alignment.
Common Mistakes
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Treating EMA crossovers as entries
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Selling spreads directly at the EMA
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Ignoring slope and structure
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Forcing trades during EMA chop
EMAs are filters, not guarantees.
How This Fits Into My Trading
The 9/20 EMA framework is used alongside:
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Price structure
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ATR context
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Volatility environment
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Risk management rules
No single indicator drives a trade decision.
Final Notes
This strategy works because it:
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Keeps trades aligned with momentum
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Reduces emotional counter-trend decisions
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Filters out poor market conditions
The goal is not precision — it’s probability alignment.
Keep in mind, no strategy has a 100% win rate. Anyone that tells you that is a liar. It’s possible to have a high win rate but it also depends on market conditions and also if there are any event news. This strategy helps you keep track of the trend and also sometimes tells you when the trend is going to reverse.