Calculates expected price moves for stocks using implied volatility from options, creating visual boxes that show potential price ranges for weekly, monthly, and yearly timeframes.
Explore complementary indicator rolesHow it works
The expected move signal calculates potential price ranges by analyzing the implied volatility of at-the-money put and call options. It uses the current stock price and multiplies it by the option's implied volatility to determine the potential price movement. This calculation typically focuses on the one-standard-deviation move, which represents approximately 68% of potential price outcomes.
The signal creates visual boxes on the price chart to represent these expected move ranges for different timeframes, including weekly, monthly, and yearly perspectives. These boxes are updated weekly, providing traders with a dynamic view of potential price volatility based on current market expectations and option pricing.
Why it may be useful
Expected move signals provide traders with a quantitative approach to understanding potential price volatility, helping them make more informed trading decisions. By visualizing the probable price range, traders can better assess risk and develop more strategic entry and exit points. These signals transform complex options volatility data into an easily interpretable visual format.
The signal is particularly valuable because it offers a probabilistic view of potential price movements, giving traders insight into market expectations. It helps traders understand the likelihood of price staying within a specific range, which can be crucial for options trading, risk management, and developing more precise trading strategies.
When to explore it
The expected move signal is most effective in markets with active options trading and significant implied volatility. It works best for stocks and ETFs with liquid options markets, where the implied volatility provides a reliable indicator of potential price movement. Traders should use this signal when they want to understand potential price ranges and market expectations.
This signal is particularly useful during periods of market uncertainty, earnings announcements, or significant economic events. It can help traders set more precise stop-loss levels, plan option strategies, and understand the market's current volatility expectations. Traders should combine this signal with other technical and fundamental analysis for comprehensive market insights.
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What we’ve verified
Access, alerts and repainting behaviour have not been independently verified for this indicator. Check the creator’s current publication and settings.
General descriptions and classifications are recovered research. Verified details above identify the specific checks we have completed. Check the creator’s current publication for later changes.
