The Broader Markets
Last Week – SPY was higher by about 1.2% last week, slightly more than the 1% move options were pricing.
This Week – SPY options are pricing about a 1% move (or about $4 in either direction) for the upcoming week. With the SPY around $452 that corresponds to just above $456 on the upside and around $448 on the downside.
Implied Volatility – The VIX ended Friday around 15.50, down slightly from the week before. The VIX is now below its historical average entering this week. VIX futures remain upward sloping, with January futures just under 23.
Expected Moves for This Week via Options AI:
Options are pricing similar market moves this week than they priced last week. Here are the expected moves for the week in the major ETFs:
- SPY 1%
- QQQ 1.4%
- IWM 1.3%
- DIA 1%
As an example of how the 1% expected move translates into strike selections, here’s an Iron Condor with short strikes set at the expected move (based on the close Friday). It would need the ETF to finish between $448 and $456 to see Max Gain:
In the News
BTC tracking etf BITO launched last week and options shortly followed. The ETF rolls futures and therefore will suffer from some drag when front-month futures are sold lower than the following month futures are bought. Because of that upside calls in outer months may be skewed lower (IV) than at the money calls. Here’s the one month expected move chart, showing a little more than a 15% expected into late November:
Expected Moves for Companies Reporting Earnings
Options AI puts the expected move at the heart of its trading experience. Traders are able to quickly generate credit and debit trades based on the Expected Move, or to their own targets in context of the Expected Move. More education on Expected Moves and options trading can be found at Learn / Options AI.
This week we’ll see earnings from tech giants Facebook, Apple, Alphabet, Microsft and Amazon and many more in one of the busiest earnings week of the season. The expected moves below are for this Friday and link to the Options AI Earnings Calendar. Recent moves on prior earnings start with the most recent.
Monday
Facebook FB / Expected Move: 5.6% / Recent moves: -4%, +7%, -3%
Tuesday
UPS UPS / Expected Move: 4.4% / Recent moves: -7%, +10%, +3%
Microsoft MSFT / Expected Move: 2.5% / Recent moves: 0%, -2%, 0%
AMD AMD / Expected Move: 5.7% / Recent moves: +8%, -1%, -6%
Alphabet GOOGL / Expected Move: 3.8% / Recent moves: +3%, +3%, +7%
Twitter TWTR / Expected Move: 9.4% / Recent moves: +3%, -15%, +13%
Robinhood HOOD / Expected Move: 14.5% / Recent moves: -10%
Wednesday
Spotify SPOT / Expected Move: 5.9% / Recent moves: -6%, -12%, -8%
Boeing BA / Expected Move: 3.8% / Recent moves: +6%, -3%, -4%
General Motors GM / Expected Move: 4.5% / Recent moves: +3%, +4%, -2%
Thursday
Shopify SHOP / Expected Move: 5.5% / Recent moves: -1%, +11%, -3%
Amazon AMZN / Expected Move: 3.7% / Recent moves: -8%, 0%, -2%
Starbucks SBUX / Expected Move: 3.2% / Recent moves: -3%, -3%, -7%
Friday
Exxon Mobile XOM / Expected Move: 2.5% / Recent moves: -2%, -3%, +2%
Based upon publicly available information derived from option prices at the time of publishing. Intended for informational and educational purposes only and is not any form of recommendation of a particular security, strategy or to open a brokerage account. Options price data and past performance data should not be construed as being indicative of future results and do not guarantee future results or returns. Options involve risk, including exposing investors to potentially significant losses and are therefore not suitable for all investors. Option spreads involve additional risks that should be fully understood prior to investing. Securities trading is offered through Options AI Financial, LLC a registered broker-dealer.
