1. What is Options Implied Move?

The Options Implied Move estimates the expected price movement of an underlying asset based on the current option prices and their implied volatility. It represents the market's expectation of how much the asset price could change over a specific period.

2. How Does the Calculator Work?

The calculator uses the Implied Move formula:

Where:

• \( \text{Price} \) — Current price of the underlying asset (in currency)
• \( \text{IV} \) — Implied volatility (in decimal form, e.g., 0.20 for 20%)
• \( \text{Days} \) — Time period in days

Explanation: The formula calculates the one standard deviation expected price move, meaning there's approximately a 68% probability the price will stay within this range.

3. Importance of Implied Move Calculation

Details: Understanding the implied move helps traders assess potential risk/reward, set profit targets, and determine stop-loss levels. It's particularly useful for earnings trades and event-driven strategies.

4. Using the Calculator

Tips: Enter the current price in dollars, implied volatility as a decimal (e.g., 0.30 for 30%), and the number of days until expiration. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What does the expected move represent?
A: It shows the expected price range (plus or minus the calculated value) where the asset price is likely to stay with 68% probability based on current options pricing.

Q2: How is implied volatility different from historical volatility?
A: Implied volatility is forward-looking and derived from option prices, while historical volatility looks at past price movements.

Q3: Why do we take the square root of time?
A: Volatility scales with the square root of time in financial models, as price movements are assumed to be independent and identically distributed.

Q4: Can this be used for any time frame?
A: Yes, but it's most accurate for shorter time frames (days to weeks) as volatility tends to change over longer periods.

Q5: How does this relate to standard deviation?
A: The calculated move represents one standard deviation. For 95% confidence, multiply by 2; for 99.7%, multiply by 3.