Last week ended with stocks near all highs and implied volatility near annual lows.
Looking ahead, SPY options only forecast an expected movement of 1.3% through Friday’s expiration, implying a bullish consensus around $ 388 and a bearish consensus near $ 377:
With some of the biggest names in tech set to report revenue this week (including Tesla Inc (NASDAQ: TSLA), Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT) and Facebook Inc (NASDAQ: FB)), QQQ options forecast an expected movement of 1.9% through Friday’s expiration, implying a bullish consensus around $ 332 and bearish consensus near $ 319:
Expected movements for companies declaring income
This week is being celebrated by the big names in technology Microsoft, Apple, Facebook and Tesla. A more complete timeline with expected movements and reactions of previous gains to BPA beats / misfires can be found on the AI Options earnings schedule.
Microsoft / Reporting Tuesday after hours / 3.7% expected move / link
Starbucks Corporation (NASDAQ: SBUX) / Reporting Tuesday after hours / 3.6% move expected / link
Apple / Reporting Wednesday after hours / 5.3% move expected / link
Facebook / Reporting Wednesday after hours / 6.0% expected move / link
Tesla / Wednesday reporting after hours / 7.2% move expected / link
Use expected movement to help inform spread trading
The expected move is the amount that options traders believe a stock price will rise or fall. This can be a quick way to cut down on noise and see where real money options traders are evaluating potential stock moves. On AI Options, it is calculated using real-time option prices and displayed on a chart.
Knowing this consensus before making a trade can be incredibly powerful whether you are using stocks or options to complete your trade. A helping hand in setting more informed price targets as well as a useful basis for starting strike selection.
Here is an example, using Starbucks and its expected move. On the AI Options platform, a trader can select the bullish consensus for spread trades to generate debit call spreads and credit put spreads around the move. Or, if a trader feels that the options market is overstating movement, a trader can select a neutral view to sell both bulls and bears and generate credit / income-generating strategies such as an Iron Condor on the move. expected – shown here:
The story continues
A closer look at some spread trades vs. bullish consensus, vs. action, and single call:
And a closer look at the Iron Condor, with hits on the expected movement:
Keep in mind that the above are just examples of the many ways a trader can express an opinion using option spreads. They are intended only to demonstrate how the expected movement can provide actionable information to consider before making any transaction, especially in an uncertain event. Whether it’s checking your own expectations against the host of options, generating trading ideas from options market signals, or for a more informed strike selection. This is why Options AI places expected movement at the heart of its graphics platform. Learn / AI Options has a few free tools as well as training on expected moves and spread trading. The concepts presented in Starbucks can be applied to any inventory and are used here for illustration purposes only. The expected movements will change slightly in each company’s revenue events, so be sure to stay up to date. via the earnings schedule. We’ll be back later this week with previews of Tesla, Facebook and more.
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