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Optionslam.com Weekly Volatility: 7 Day Implied Price Movement


 

The OptionSlam Implied Price Movement over 7 days is one of the most innovative tools for option traders available anywhere on the internet.

This indicator is better suited and more accurate for Earnings Traders as it is based on multiple short term option series rather than the conventional calculations based on longer time periods to calculate Implied Volatility (IV).

At OptionSlam.com we believe that tracking weekly options pricing provides a more accurate view of IV at binary events such as a company’s quarterly earnings release.

Our unique approach calculates the seven day implied price movement for the given stock based on multiple weekly options pricing. We present this as an Implied Price Move over seven calendar day periods.

Only stocks that offer weeklies out three or more weeks in advance qualify for the tracking process.

This indicator allows traders to study volatility changes before and after each earnings announcement providing several strategic opportunities. A few ideas to apply it could include the following.

  1. Visualize volatility levels before an upcoming earning event and compare to prior earning events. A relative low value may present an opportunity to buy a straddle. A relative high value may present an opportunity to enter a calendar spread or short strangle. Other strategies certainly apply as well.
  2. Monitor the volatility increase before the earnings analyzing how many days ahead of the Earnings Release does the volatility start to build. A long premium (long vega) strategy that takes advantage of this timing could be the long straddle closing one or two days pre-announcement. This strategy benefits both from volatility increase and gets a bonus with any substantial delta move approaching the ER.
  3. Evaluate the severity of the volatility crush which inevitably follows the Earnings Release to determine which premium selling strategy could work best for you. Be it the short strangle or double diagonal as well as other variations of these base strategies are also available to the Earnings Trader.
  4. Monitor volatility between known binary events to spot hidden volatility spikes due to other impending market anticipation for other trading opportunities.

The possibilities go on on. Please give this new set of tools a try and tell us how you like to use the new and innovative indicator.

Tool: Optionslam.com Weekly Implied Price Movement: For a snapshot of the most recent weekly volatility numbers.

 
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