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Opening Range Breakout (ORB)

The opening range breakout is a trading strategy where traders take a position when the price of the underlying breaks the high or low of the first 15-minute candle. Traders employ the opening range breakout strategy to capitalize on the elevated premium in the morning.



ORB Call Credit Spread

Below is an example of the opening range breakout triggering a Call Credit Spread (CCS). As you can see, the first 15-minute candle formed a high and a low indicated by the pink and yellow lines. Once a candle breaks below the low of the first 15-minute candle, it signals the entry point for a call credit spread.


ORB Put Credit Spread

Below is an example of the opening range breakout triggering a Put Credit Spread (PCS). Once a candle breaks above the high of the first 15-minute candle, it signals the entry point for a put credit spread.


ORB Iron Condor

If I do not see follow-through on the first breakout, I will leg into an iron condor on the second breakout, reducing risk, becoming directionally neutral, and minimizing my potential loss on the trade.


In this example, the initial opening range breakout was a put credit spread, as indicated by the break of the pink line. However, it turned out to be a false breakout. The market came back down and broke the low, as indicated by the yellow line. At that point, I entered a call credit spread, and I am now positioned in an iron condor.


Scenarios
  1. If the initial breakout is successful, I close my position for 50% to 80% of the premium collected

  2. If the initial breakout is unsuccessful, I will leg into an iron condor. My entry signal for the iron condor occurs on the second breakout of the same 15-minute candle. From there, I will manage each side with a 2x stop on my entry price. If I stop out on one spread, the other spread is in profit. If my stop is reached, I immediately close out both sides of the trade reducing the overall loss.

  3. If I am in an iron condor and I do not get stopped out, I will look to leg out of the iron condor for 50%-80% of premium collected. Profiting from both sides.

  4. If the SPX trades inside the high and low of the first 15-minute candle, it wont trigger a call or put credit spread and I will take no trades. While these situations are rare, they can occur.


ORB Bot

In our Discord server, we have an opening range breakout alert called the ORB-Bot, which triggers a notification when a candle breaks the high/low of the first 15-minute candle. This alert can be found in the Daily-updates channel, along with recommendations on trade variables.


My Trade Variables

When I enter an opening range breakout trade, there are a few things I look at. First, I aim to collect a minimum of $80 per contract. Next, I write my spread above or below the first 15-minute high/low. I also try to write above or below a significant gamma support or resistance level.



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