The Broader Markets
Last Week – SPY was lower by about 2.3% last week, a larger move than the 1.4% options were pricing. Implied volatility was slightly higher on the week.
This Week – SPY options are pricing about a 1.4% move this week (about $6 in either direction) into Thursday’s close. Markets are closed on Friday.
Implied Volatility / VIX – The VIX once again crept higher, moving from 21 the prior week to just under 23 to end last week. It remains higher than historical averages.
Expected Moves for This Week (via Options AI)
- SPY 1.8% (about $8)
- QQQ 2.6% (about $9)
- IWM 2.5% (about $5)
- DIA 1.5% (about $5)
In the News
Twitter (TWTR) saw more headlines last week, many of them breaking on the platform, and Elon Musk’s account. Following a week where the stock was 18% higher, the stock was basically unchanged last week, Options were pricing about a 5.5% move last week and about 13% for the rest of April. Options are pricing a roughly 9% move this week, and despite a week passing, 13% to the end of April. The company is due to report earnings April 28th.
The stock is now near the midpoint of where it was just before the original Musk news (just below $40) and the highs it reached after (near $53). The 13% expected move for the end of April (that includes earnings) puts a bullish and bearish options consensus roughly inline with those two levels. Musk proposed a bid to take the company private at $54.20 a share but the Twitter board enacted a poison pill strategy to prevent a takeover.
A dollar wide-winged Iron Condor expiring April 29th, with short strikes set at 41 and 53 is priced to risk roughly $55 to make up to $45 (using the mid). That range is in-line with the move options are pricing and the short strike on the upside is right near Musk’s stated price. Options have a tendency to price the obvious at times and in this case those are the levels everyone is focused on. You can see that range and the risk/reward on the chart below:
The Earnings Calendar is packed the next 2 weeks. This week is highlighted by Bank of America, Netflix, Tesla, and Snap. Links below go to the Options AI calendar where you can see the other companies each day and click through to see charts (free to use). Recent earnings moves (actual) start with the most recent:
Bank of America BAC / Expected Move: 4.1% / Recent moves: 0%, -4%, +4%
Charles Schwab SCHW / Expected Move: 4.2% / Recent moves: -4%, +4%, -2%
Johnson & Johnson JNJ / Expected Move: 3.2% / Recent moves: +3%, +2%, +1%
Lockheed Martin LMT / Expected Move: 3.6% / Recent moves: +4%, -12%, -3%
Netflix NFLX / Expected Move: 8.2% / Recent moves: -22%, -2%, -3%
IBM IBM / Expected Move: 4.3% / Recent moves: +6%, -10%, +1%
Tesla TSLA / Expected Move: 6.2% / Recent moves: -12%, +3%, -2%
Abbot Labs ABT / Expected Move: 3.4% / Recent moves: -3%, +3%, -1%
Lam Research LRCX / Expected Move: 5.5% / Recent moves: -7%, -2%, -2%
Las Vegas Sands LVS / Expected Move: 5.6% / Recent moves: -5%, -2%, -4%
Snap SNAP / Expected Move: 14.8% / Recent moves: +59%, -27%, -24%
American Airlines AAL / Expected Move: 5.7% / Recent moves: -3%, +2%, -1%
American Express AXP / Expected Move: 10.4% / Recent moves: +9%, +5%, +1%
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.