N Option Selling 1

**NIFTY Weekly Option Seller – Regime & Risk Framework (HTF + RSI)**

This indicator is a **decision-support tool for NIFTY option sellers**, designed to identify whether current market conditions favor:

* **Iron Condor (IC)** – range / mean-reversion
* **Put Credit Spread (PCS)** – bullish bias
* **Call Credit Spread (CCS)** – bearish bias

The script focuses on **structure selection and risk management**, not trade execution.

---

## Core logic

### 1) Multi-timeframe context

* Signals are calculated on the **active chart timeframe** (commonly 4H).
* **Daily (HTF) EMA trend and Daily ADX** are used as **gating conditions**, ensuring strong directional scores are not allowed against the higher-timeframe context.

This prevents aggressive trend selling when the daily structure does not support it.

---

### 2) Three independent regime scores (0–5)

The script computes three capped and smoothed scores:

* **IC score (Range quality)**
Based on low ADX, price inside CPR, proximity to VWAP, Camarilla H3–L3, daily range confirmation, and mid-band RSI.

* **PCS score (Bullish structure)**
Based on EMA up-stack, trend strength (ADX), price relative to CPR/VWAP, with RSI and Daily trend acting as **brakes**, not entry signals.

* **CCS score (Bearish structure)**
Based on EMA down-stack, trend strength (ADX), price relative to CPR/VWAP, with RSI and Daily trend acting as **brakes**, not entry signals.

RSI is used only to **cap aggressiveness at extremes**, not to predict reversals.

---

### 3) Cross-penalty & smoothing

* When multiple regimes score high simultaneously, **cross-penalties reduce conflicting scores** so only one regime dominates.
* Final scores are **smoothed across bars** to avoid frequent regime flips and unstable sizing decisions.

---

### 4) Regime selection

The script selects **one primary regime** (IC / PCS / CCS) based on the highest adjusted score, with tie-break logic that prefers trend regimes only when ADX confirms strength; otherwise it defaults to IC.

---

### 5) Non-repainting reference levels

The indicator plots key **previous-day, non-repainting levels**:

* CPR (Low / High with Narrow–Wide classification)
* Camarilla H3, L3, H4, L4
* VWAP

These are contextual reference levels for structure and risk placement.

---

### 6) DEFEND / HARVEST prompts

Using ATR-based proximity logic, the script provides:

* **DEFEND** alerts when price approaches modeled risk zones
* **HARVEST** alerts when sufficient cushion exists
* **REGIME** alerts on confirmed regime changes

These are **risk-management prompts**, not buy/sell signals.

---

### 7) Visual dashboard

A compact panel displays:

* Active regime and score
* ADX / RSI
* CPR width classification
* EMA structure and tightness
* VWAP proximity
* IC / PCS / CCS scores
* Key level snapshot

---

## Intended use

* Designed for **weekly option selling**
* Best used on **4H charts with Daily context**
* Suitable for traders who manage positions **once per day**
* Encourages **structure-first thinking** (IC base with controlled directional bias)

---

## Disclaimer

This indicator does **not place trades** and does not calculate position size or P&L.
It is a **market regime and risk-awareness tool** and must be used with proper capital management and execution discipline.