Last Week – The rally continued.
SPY rallied 2.5% last week, a 1% move more than the 1.5% move options were pricing. The VIX was down slightly and at 18.50 is now the lowest it has been in the past year.
This Week – All eyes on the Fed, big cap tech reports and NFP
As mentioned, the VIX was lower last week on the heels of a 2.5% market rally. However, this week sees the FOMC decision on Wednesday, Non-farm payrolls on Friday and a slew of big-cap tech earnings. All of which could be market moving. SPY options for the week are pricing about a 2% move, and obviously, with reports from Apple, Amazon, and more, QQQ options are pricing a larger move, nearly 3%. As mentioned here over the past few weeks, traders need to be aware of the overall vol environment as that can set up for underpriced options in names that see earnings misses. The same may be true for economic releases as in recent months a more typical SPY expected move for an FOMC (or CPI in mid-Feb) would have been closer to 3% than this week’s 2%. Of course, the lower IV we’re seeing is accompanying a market rally alongside a little more certainty on Fed moves. If the script were to hold (.25 hike and no statement bombs) and the market continued to grind higher through earnings, vol could further compress.
The last time the VIX was lower than now was the Summer of 2021 with a VIX as low as 15. In December 2019, pre-pandemic, the VIX was as low as 13. In other words, IV is as low as it’s been in a year, but historically it’s still near average.
Expected Moves for This Week (via Options AI free tools)
- SPY 2.0%
- QQQ 2.8%
- IWM 2.2%
- DIA 1.7%
- Tuesday – Home Prices
- Wednesday – ISM Manufacturing PMI, FOMC Rate Decision, Powell Press Conference
- Thursday – ECB Rate Decision
- Friday – Non-Farm Payrolls, ISM Services PMI
Earnings This Week
Via the Options AI Earnings Calendar. Expected move, weekly IV, and prior earnings moves (starting with most recent).
- SoFi SOFI / Expected Move: 12.6% / IV 121 / Prior moves: -11%, +28%, +5%, +3%
- ExxonMobile XOM / Expected Move: 3.2% / IV 31 / Recent moves: +3%, +5%, -2%, +6%
- United Parcel UPS / Expected Move: 5.4% / IV 53 / Recent moves: -1%, -3%, -3%, +14%
- General Motors GM / Expected Move: 5.9% / IV 58 / Recent moves: +4%, -3%, -5%, +3%
- Spotify SPOT / Expected Move: 9.7% / IV 96 / Recent moves: +3%, +12%, -12%, -6%
- Advanced Micro AMD / Expected Move: 9.7% / IV 96 / Recent moves: +3%, +12%, -12%, -6%
- Snap SNAP / Expected Move: 17.1% / IV 170 / Recent moves: -1%, +5%, -4%, -24%
- Meta META / Expected Move: 8.4% / IV 83 / Recent moves: -25%, -5%, +18%, -26%
- Amazon AMZN / Expected Move: 7.2% / IV 71 / Recent moves: -7%, +10%, -14%, +14%
- Apple AAPL / Expected Move: 4% / IV 39 / Recent moves: +8%, +3%, -4%
- Alphabet GOOGL / Expected Move: 5% / IV 49 / Recent moves: -9%, +8%, -4%. +7%
- Starbucks SBUX / Expected Move: 5.5% / IV 54 / Recent moves: -8%, -5%, +10%. -5%
- Ford F / Expected Move: 5.7% / IV 54 / Recent moves: +1%, +6%, -2%. -10%
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, member FINRA and SIPC.