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Advanced Option Lessons

A hands-on options curriculum covering real trading concepts. Read the lessons, work through examples, and test your knowledge.

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Key terms in this lesson

Fair Value Gap (FVG)
Module 11: Volume ProfileIntermediate 20 Min

Lesson 3: 11.3: The Value Area (VAH & VAL)

Understand the range where the majority of trading volume takes place.

1. Defining the Value Area

The Value Area (VA) is the price range on a volume profile where a specified percentage of total volume was executed. By convention, this is set to 70% (derived from the first standard deviation of a normal bell curve distribution).

This range defines where the market established a clear consensus of value during the session. Prices within the Value Area are considered 'fair', while prices outside are considered 'unfair'.

★ Boundary Markers: The Value Area High (VAH) is the upper boundary of this range, and the Value Area Low (VAL) is the lower boundary.

2. Inside vs. Outside Value Dynamics

• Inside Value Area: Price is in a state of balance. Trading is dominated by responsive players who fade the edges (buying VAL, selling VAH) expecting price to return to the POC.

• Outside Value Area: Price is in a state of imbalance. If price moves outside VAH or VAL and establishes acceptance (time and volume), it signals that initiative buyers or sellers are driving a breakout trend toward a new value region.

A volume profile with the value area from 102.5 to 105.5 shaded around the point of control at 104
The value area starts at the point of control (104, 100 units) and adds the larger neighbor each time: 105 (80), then 103 (70). That reaches 100 + 80 + 70 = 250 of 360 units = 69.4%, about 70%, with edges at VAL 102.5 and VAH 105.5. It is a binning convention, not one standard deviation and not a fair-value measure.
Interactive Option Simulation Lab

Interactive Volume Profile Canvas

LAB SIMULATOR ACTIVE

Volume profile plots the cumulative volume traded at specific price levels, revealing the Point of Control (POC - price of highest volume) and the Value Area (where 70% of transactions occur).

Profile Controls
Point of Control (POC):$100
Value Area (VA) Width:20 points
Value Area High (VAH):$110
Point of Control (POC):$100
Value Area Low (VAL):$90
VOLUME PROFILE INTERACTIVE CANVAS
$120
$117
$114
$111
$108
$105
$102
$99
$96
$93
$90
$87
$84
$81
$78
VAHPOC (FAIR VALUE)VAL
• Notice how price finds repeated acceptance and support near the high-volume POC, while accelerating rapidly when exiting the Value Area limits.

KNOWLEDGE RECONNAISSANCE

Q01.

What percentage of total trading volume is conventionally contained within the Value Area?

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