This week in options. Amazon, Nike, Micron, Bed Bath, Blackberry and more.


The Broader Markets

Last Week – SPY declined 4.5% last week, following a 5% decline the week before. Options were pricing less than a 3% move.

This Week – SPY options are pricing a 2.8% move for the upcoming week.

Implied Volatility / VIX – The VIX closed the week near 30, up from 26 the week before. It was as high as 32 intraday Friday and is now near some of its highest levels of 2022.

Expected Moves for This Week (via Options AI)

  • SPY 2.8% (+/- $11)
  • QQQ 3.4% (+/- $10)
  • IWM 3.4% (+/- $6)
  • DIA 2.4% (+/- $8)


In the News

With implied volatility near the highs of the year, there’s a who’s who of market-leading stocks and major ETFs in the 100 IV rank lists. Of stocks whose current IV is near their highs of the year include, AAPL, AMZN, TSLA, NVDA, MSFT, INTC, META, GOOGL as well as banking names like BAC and MS. On the ETF side, XLF, XLE as well as IWM and SPY. In other words, there’s very few idiosyncratic pockets of high IV in the market, a lot of fear across the board, and not many places to hide.

From an options trading standpoint, that means calls and puts are expensive. call and put spreads a little less expensive, and credit spreads with very wide breakevens. For instance, here’s a comparison of two Iron Condors in Amazon. Both are based on the current Expected Move, with the stock currently around $114. Both have wide breakevens from the current stock price, and are obviously selling at a level of elevated IV.

The first expires on October 21st, risks around 3/2 and has breakevens at 103 on the downside and 125 on the upside. That 103 level is near the lows of the year.

The second expires Nov 18th, risk is close to 1/1, and has breakevens around 98.50 on the downside, and 128.50 on the upside. That 98.50 breakeven is below the lowest levels of the year for AMZN.


Earnings

Links below go to the Options AI earnings 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:

Tuesday

  • Blackberry BB / Expected Move: 8.4% / Recent moves: +7%, -10%, +2%

Thursday

  • Nike NKE / Expected Move: 6.6% / Recent moves: -7%, +2%, +6%
  • Micron MU / Expected Move: 6.7% / Recent moves: -3%, -4%, +5%
  • Bed Bath and Beyond BBBY / Expected Move: 14.8% / Recent moves: -24%, -1%, +8%


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.

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