Volatility & Bandsdraws in its own pane

Flags when the Bollinger bands compress inside the Keltner channel — volatility coiling — and which way the tape leans when it fires.

On this chart: 20-period, Bollinger 2σ vs Keltner 1.5×ATR, Carter's construction.

John Carter's squeeze formalizes the Bollinger-inside-Keltner read into one pane. The dot row on the zero line is the state: red dots while the Bollinger bands sit inside the Keltner channel (compression on), green once they expand back out (the squeeze has fired). The histogram is momentum — the close's regression-measured displacement — saying which way the tape leans.

This is the study the chart's Bollinger and Keltner bands have always implied together; the pane just reads their relationship out loud.

A run of red dots means close-to-close movement has gone unusually quiet even relative to bar ranges — energy storing. The fire (first green dot after a red run) marks expansion beginning, with the histogram's side and slope at that moment as the direction read. The dot colors follow the same convention as the VIX gauge: red is the interesting state, not the alarming one.

Volatility compression and expansion are the premium seller's weather. A long squeeze describes cheapening options — compressed realized movement bleeds into implied — while the fire marks expansion, when premium fattens and strikes need more room. Where a name sits in that cycle is context for both what its premium pays and how far out the strikes should breathe.

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