The Broader Markets
Last Week – SPY was higher by 5%, less than the 0.8% expected move options were pricing.
This Week – SPY options are pricing a 0.8% move (in either direction) for the upcoming (4 day) week. With the SPY around $453 that corresponds to about $449 as a bearish expected move and $456 as a bullish expected move.
Implied Volatility – The VIX was unchanged on the week and ended Friday at about 16.50. That is lower than its historical average. December VIX futures are about 22, down slightly from last week.
Expected Moves for This Week via Options AI:
The major ETFs are all pricing similar moves this week than they did last week:
- SPY 0.8%
- QQQ 1.0%
- IWM 1.5%
- DIA 0.8%
The 0.8% expected move in the SPY is lower than the historical average. An Iron Condor with short strikes set at the expected move (based on the close Friday), needs the ETF to finish between $450 and $456 to see Max Gain. Here’s an example on the Options AI chart, showing the risk/reward and breakeven of a $1 wide condor at the Expected Move.
In the News
Covid booster shots are now a topic of conversation and Pfizer (PFE) may be available for a roll-out by the end of September with their FDA review scheduled for the 17th. Moderna (MRNA) will likely lag Pfizer and officials are recommending those that had the Moderna shots to wait for a Moderna booster. There is no timeline yet for review of a Johnson & Johnson booster. Here’s how options are pricing expected moves for those three stocks out to October 1st:
- PFE 4.5%
- MRNA 12%
- JNJ 2.5%
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.
Some earnings of note this week with expected moves, and recent actual earnings moves.
Coupa COUP / Expected Move: 6.4% / Recent moves: -8%, -5%, -3%
Lululemon LULU / Expected Move: 5.1% / Recent moves: +4%, -3%, -7%
Gamestop GME / Expected Move: 13.1% / Recent moves: -34%, -19%, -15%
Restoration Hardware RH / Expected Move: 8.1% / Recent moves: +16%, +9%, -3%
ZScaler ZS / Expected Move: 8.1% / Recent moves: +12%, +5%, +26%
Kroger KR / Expected Move: 4% / Recent moves: +4%, +3%, -4%
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.