The Broader Markets

Last Week – SPY finished last week lower by 1%, in line with the 1% options were pricing. The move lower, the majority of which happened on Friday, snapped 3 weeks of higher closes.

This Week – SPY options are pricing about a 1.2% move (in either direction) for the upcoming week. That corresponds to about $426 as a bearish expected move and $436 as a bullish expected move.

Implied Volatility – The VIX was higher on the week closing above around 18.45 after beginning the week near 16. The VIX is near its historical average as the market enters earnings season.

Expected Moves for This Week via Options AI:

  • SPY 1.2% (0.2% more than last week)
  • QQQ 1.6% (0.1% more than last week)
  • IWM 2.6% (0.8% more than last week)
  • DIA 1.3% (0.1% more than last week)

In the News

OPEC reached a deal on Sunday to increase oil production into year end. Oil prices are near their highest levels of the past 2 years.

Options in the US Crude fund USO are pricing about a 7% move over the next month, corresponding to about $52 for a bullish expected move and $45 for bearish:


Expected Moves for Companies Reporting Earnings

Earnings season began last week with some of the major financial institutions kicking things off. The bank stocks didn’t see large initial earnings moves (beyond what options were pricing) but sold off Friday with the broader market with most lower by more than what options had priced for their earnings weeks.

The Options AI Earnings Calendar is a free resource to keep up to date on upcoming earnings, how options are pricing potential moves, and how that compares to actual moves from prior earnings (starting with most recent).

Options AI puts the expected move at the heart of its trading experience. Traders are able to quickly generate trades based on the move, or to place their own price target in context of the expected move. More education on expected moves and spread trading can be found at Learn / Options AI.

Monday

IBM IBM / Expected Move: 3.8% / Recent moves: +4%, -10%, -6%,

Tuesday

Netflix NFLX / Expected Move: 5.8% / Recent moves: -7%, +17%, -7%

Chipotle CMG / Expected Move: 3.7% / Recent moves: -2%, -2%, -5%

United Airlines UAL / Expected Move: 4.5% / Recent moves: -9%, -6%, -4%

Wednesday

Coca Cola KO / Expected Move: 2.1% / Recent moves: +1%, 0%, +1%

Johnson & Johnson JNJ / Expected Move: 4.1% / Recent moves: +2%, +3%, -2%

Texas Instruments TXN / Expected Move: 3.5% / Recent moves: -4%, -5%, -3%

Thursday

Intel INTC / Expected Move: 5.2% / Recent moves: -5%, -9%, -11%

Snap SNAP / Expected Move: 10.4% / Recent moves: +7, +9%, +28%

Twitter TWTR / Expected Move: 9.2% / Recent moves: -15%, +13%, -21%,

Friday

American Express AXP / Expected Move: 3.1% / Recent moves: -2%, -4%, -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.

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