This week in options. SPY, QQQ, Tesla, Adobe, Oracle and more.


The Broader Markets

Last Week – The SPY rallied 3.6% last week, more than making up for the prior week’s 3.1% decline. Options were only pricing a 2% move, so that’s several weeks in a row where options have been underpricing market moves.

This Week – SPY options are again pricing a 2% move for the upcoming week.

Implied Volatility / VIX – After 2 weeks near 26, the VIX declined to close last week, under 23.

Expected Moves for This Week (via Options AI)

  • SPY 2% (+/- $8)
  • QQQ 2.6% (+/- $8)
  • IWM 2.4% (+/- $4.50)
  • DIA 1.7% (+/- $5.50)


In the News

Last we checked in on Tesla (TSLA) in this space was with the stock heading into its 3-for-1 stock split. At the time the stock was about $295 split-adjusted and options were pricing an expected move was about 11% for the next month and a year-end expected move of about 25%. The stock did indeed move lower by about 11% but has now rallied right back, essentially now unchanged since its split and near $300.

As we’ve mentioned numerous times, TSLA stock has tended to make quick moves that far outpace option pricing, both higher and lower in the stock, over the past year. But splits can sometimes affect a stock’s volatility. Since the split, TSLA stock moves have been fairly muted, albeit with a very small sample set. Here’s the pricing going forward, with the options market pricing about a 10% move for the next month, and about a 20% move into year-end:


Education

6 Option Spread Strategies to Know


Earnings

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:

Monday

  • Oracle ORCL / Expected Move: 5.4% / Recent moves: +10%, +2%, +16%

Thursday

  • Adobe ADBE / Expected Move: 5.2% / Recent moves: -1%, -9%, -10%

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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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