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Volatility3 minute read
What is an options expected move?
Understand the range implied by option prices, its time horizon, and why it is not a price target
Prepared by Mark · Primary sources below
Direct answer
An options expected move is an estimate of the range of underlying-price movement implied by option prices and implied volatility over a specified horizon. It is not a ceiling, floor, or directional target. The method, contract selection, time convention, and volatility input determine the number, so two platforms can display different expected moves for the same underlying
It starts with options-implied uncertainty
Implied volatility is inferred from option prices and expresses the scale of movement priced by the market. An expected-move estimate converts that annualized uncertainty into a shorter time horizon
The horizon is part of the answer
A one-day estimate and a one-month estimate are not directly comparable because each uses a different amount of remaining time. Always read the range with its expiry or checkpoint date
A move outside the range is still possible
Markets do not stop at an expected-move boundary. The estimate is a way to frame what is priced, not a promise that the underlying will remain inside a band or reach either edge
Sources and further reading
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