The Broader Markets
Last Week – SPY finished the week inside its expected move, up about 0.5% vs the 1% move options were pricing for the week. The VIX was slightly higher mid week but closed Friday roughly unchanged from the prior week.
This Week – SPY options are pricing about a 1% move (in either direction) for the upcoming week. That corresponds to about $418 as a bearish consensus and $427 as a bullish consensus. Expected moves for both QQQ and IWM have compressed since last week.
Expected Moves for This Week via Options AI:
- SPY 1% (same as last week)
- QQQ 1.3% (less than last week)
- IWM 1.6% (less than last week)
In the News
Meme/short squeeze stocks peaked on Thursday before a pullback into Friday. Options premium tends to spike when the stocks are squeezing higher and compress when the stocks have down days, a dynamic traders should be watchful of when positioning directionally. Expected moves for this week for some of the names in the news:
- AMC 40%
- Gamestop GME 21%
- Blackberry BB 24%
- Bed Bath and Beyond BBBY 12%
- Virgin Galactic SPCE 10%
Expected Moves for Companies Reporting Earnings
Earnings season continues with reports from Gamestop, Chewy, FuelCell, Coupa and more.
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). Here is a look at this week’s charts (links go to the Options AI Calendar / Expected move page):
MONDAY
Marvell Technology MRVL / Expected Move: 5% / Recent moves: -12%, -5%, +6%
Coupa Software COUP / Expected Move: 7% / Recent moves: -5%, -3%, -6%
Stitch Fix SFIX / Expected Move: 6% / Recent moves: +3%, -8%, -2%
WEDNESDAY
Gamestop GME / Expected Move: 21% / Recent moves: -33%, -19%. -15%
Restoration Hardware RH/ Expected Move: 8% / Recent moves: +9%, -3%, +20%
THURSDAY
Chewy CHWY / Expected Move: 8% / Recent moves: +5%, -5%, -10%
FuelCell Energy FCEL / Expected Move: 14% / Recent moves: -9%, +3%, -17%
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.
Here’s an example of using the expected move to generate an Iron Condor that “sells the move” in GME. The Condor looks to profit if GME stays within its expected move following earnings. It is a max gain between 195 and 297.50. If the stock moves beyond what options are pricing, the Condor is a max loss (with defined risk) below 190 or above 302.50:
More education on expected moves and spread trading can be found at Learn / Options AI.
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.
