Expected Move Thinkorswim: Step by Step Analysis

To analyze the expected move in Thinkorswim, start by identifying the underlying volatility of the underlying security, which can be done by looking at the Implied Volatility (IV) of the option. Thinkorswim uses a proprietary formula to calculate the expected move, but it's often around 1-2% of the underlying price.

The expected move is influenced by the strike price of the option, with closer strikes resulting in a higher expected move. In Thinkorswim, the expected move is also affected by the underlying security's trading volume and open interest.

The Market Maker Move (MMM) is a calculation that estimates potential daily price movement based on stock price, volatility differential, and time to expiration, along with some proprietary inputs.

It doesn't guarantee a stock will move by a certain magnitude or direction, but rather indicates the options market has priced in an expected move above that of a typical trading day.

The MMM value is an estimate, not a prediction, and actual moves can be more or less, up or down, or there could be no reaction at all.

For example, if XYZ is trading at $100 with an MMM of ±10, it means the options market has priced in a $10 move, whether as low as $90 or as high as $110.

This calculation can be a useful tool for traders, but it's essential to remember that there are no guarantees.

Calculating move is a crucial step in understanding a stock's potential price movement. You can use the square root of time formula to estimate the price's potential movement based on implied volatility.

The expected move calculation considers implied volatility to forecast potential price range movement, enabling traders to measure whether actual price movement exceeded expectations. This calculation involves using 85% of the value of an at-the-money long straddle.

To calculate the expected move, you can choose the first expiry date after the earnings date and multiply that value by 85% to get the expected moves. You can then translate the results into percentage terms by dividing them by the stock's current price.

The price of an at-the-money straddle can indicate the underlying stock's implied volatility. This is a simple way to calculate the expected move, and it's a good ballpark number to determine a stock's expected move.

To calculate moves effectively, you need to start with the right inputs.

Setting up the inputs for your indicator is the first step in the process. These inputs allow users to customize which elements they want to see on the chart.

Gap fill labels, gap-and-go labels, or expected move labels are just a few examples of the various labels users can toggle on and off.

Setting these inputs to "yes" by default makes them visible unless the user decides to hide them.

This flexibility is especially useful for traders who want to tailor their charts to their specific needs and trading strategies.

By default, these labels are visible, but users can easily turn them off if they're not needed.

The expected move calculation considers implied volatility to forecast potential price range movement. This enables traders to measure whether actual price movement exceeded expectations.

You can use the square root of time formula to estimate the price's potential movement based on implied volatility. This formula helps traders compare the actual move with the expected range.

A simple way to calculate the expected move is to use 85% of the value of an at-the-money long straddle. Long straddles are designed to profit from an increase in implied volatility by purchasing call and put options with the same strike price and expiration date.

You can calculate the expected move by choosing the first expiry date after the earnings date and multiplying that value by 85%. This will give you the expected moves, which you can then translate into percentage terms by dividing them by the stock's current price.

The expected move is only the expected fluctuation range of the stock price, not a prediction of the direction of the price movement.

The options market thinks Apple stock could move up or down by $7.31 between now and February 3, based on the calculation of 85% of the value of the front-month at-the-money straddle.

This move translates to roughly a 5.4% move either way, based on Apple's current price of $135.

Let's dive into the world of expected moves with thinkorswim, and see how it can help us make informed decisions.

The expected move is a powerful tool that helps us understand how much a stock might move in a given time frame. For example, if Apple is trading at $135 two days before its earnings announcement, the options market is implying an expected move of $7.31.

This expected move is calculated by multiplying the total premium of the at-the-money straddle by 85%. In this case, the total premium is $8.6, which means we can expect Apple stock to move up or down by $7.31 between now and February 3.

The expected move can also be expressed as a percentage of the stock price, which in this case is roughly 5.4% ($7.31/$135). This means that the options market thinks Apple stock could move up or down by 5.4% in the next few days.

The expected move is not set in stone, and the market is constantly changing. However, it can give us a good idea of how much a stock might move in a given time frame.