Options Expected Move Calculator

Calculate Expected Move (EM)





Formula

The formula to calculate the expected move of an option (EM) is:

\[ \text{EM} = S \cdot IV \cdot \sqrt{\frac{T}{365}} \]

Where:

What is Options Expected Move?

Options Expected Move is a financial metric used in options trading to predict the potential price range of an underlying asset, such as a stock, within a certain period. It is calculated based on the price of the options contracts for that asset and represents the one standard deviation price range. This means that the market predicts there is a 68% probability that the price of the asset will fall within this range. This information can be useful for traders in making decisions about buying or selling options.

Example Calculation

Let's assume the following values:

Using the formula to calculate the expected move:

\[ \text{EM} = 100 \cdot 0.2 \cdot \sqrt{\frac{30}{365}} = 100 \cdot 0.2 \cdot 0.287 = 5.74 \]

The expected move (EM) is 5.74.