Volatility & Bandsdraws in its own pane

How far this stock actually moves in a session, gaps included. For a premium seller it's a sizing tool: 'one ATR below spot' is a concrete distance.

On this chart: 14 periods, Wilder smoothing.

Average True Range measures each bar's true range — the day's high-low span, widened to include any gap from the prior close — and smooths it with Wilder's method. The gap term is the point: a stock that opens 5% down and trades flat has moved 5%, and a range measure that missed the gap would call that day quiet.

ATR is denominated in dollars, so read it against the price: a $2 ATR means very different things at $20 and at $200. Rising ATR during a decline is fear accelerating; ATR bleeding lower for weeks is the compression that often precedes expansion.

The premium seller's ruler. "One ATR below spot" converts a strike distance into units of demonstrated daily movement, and it does not care whether implied volatility is distorted that week — it is what the stock actually does. Comparing IV-implied daily moves against ATR is also the quick version of the IV/HV question: is the options market pricing more movement than the stock delivers?

Like everything in this guide, these are descriptions of conditions and reference levels — context for your own decisions, not instructions to trade.