Expected Move: The Market's Crystal Ball Every Options Trader Should Master

What The Heck Is Expected Move (And Why Should You Care)?

Expected move is the market's best guess at how much a stock will swing, up or down, by options expiration. Think of it as Wall Street's weather forecast for your portfolio.

Here's the beauty: it's surprisingly accurate when you know how to use it right.

The Simple Math Behind It: For monthly options (our sweet spot of 30-45 days), the formula is: Stock Price × Implied Volatility × 0.316 to 0.387.

Don't worry about memorizing that, your broker calculates it automatically. What matters is understanding what it tells you.

Real Money Example: Microsoft's Monthly Dance

Let's say Microsoft (MSFT) is trading at $525, and the 35-day options show 21% implied volatility. The expected move? About $27.

What this means in plain English:

• 68% chance MSFT stays between $498 and $552 over 35 days

• 16% chance it rockets above $552

• 16% chance it tanks below $498

Smart traders don't bet on these probabilities, they position around them.

The Three Pillars of Monthly Expected Move Success

Pillar #1: Time Is Your Patient Friend

With monthly options, time decay works like a slow cooker instead of a microwave. A $25 expected move at 45 days becomes roughly $20 at 30 days, then $12 at 15 days.

The Stagger Strategy: Don't put all your eggs in one monthly basket. Start new trades every week at the 45-day mark. This creates a pipeline where you're always collecting time premium. Just remember, implied volatility, as seen through IV rank and IV percentile, must stand at appropriate levels for this to be viable. There will be slower periods where positions are staggered further apart.

Pillar #2: Volatility Cycles Are Predictable

Markets breathe. High volatility periods (sell premium) alternate with low volatility periods (buy premium or bet on breakouts).

Monthly advantage: Longer timeframes smooth out the daily noise, making these cycles easier to spot and trade.

Pillar #3: Multiple Events = Stable Expectations

Monthly options span multiple market events, earnings, Fed meetings, economic reports. This actually makes expected move calculations MORE reliable, not less.

The Staggered Monthly System That Actually Works

Strategy #1: The Overlapping Iron Condor Pipeline

Instead of placing one big iron condor, create multiple smaller ones across different expiration dates.

Example with XYZ at $580:

• Week 1: 45-day condor (sell $612/$548 strikes, $32 expected move)

• Week 2: 38-day condor (sell $609/$551 strikes, $29 expected move)

• Week 3: 31-day condor (sell $605/$555 strikes, $25 expected move)

• Week 4: Close expiring positions, start new 45-day cycle

Why this works: You're never dependent on one month's performance. Bad weeks get averaged out by good weeks.

Strategy #2: The 30-Day Cash Flow Machine

Focus on the 30-day sweet spot where time decay accelerates but you still have room for adjustments.

Simple approach:

• Sell cash-secured puts below expected move boundaries on quality stocks

• Collect premium while waiting to buy stocks you actually want to own

• If assigned, sell covered calls above expected move ranges

Strategy #3: The 45-Day Foundation Builder

Use longer-dated monthlies as your portfolio foundation, these give you the most flexibility when things go wrong.

Conservative play:

• Iron condors on liquid ETFs (SPY, QQQ, IWM)

• Target 8-12% monthly returns on deployed capital

• Look to close at 50% to 75% profit

Your Weekly Management Calendar

Monday: New Position Day

• Open fresh 45-day positions

• Review any positions getting close to expiration

• Check the economic calendar for upcoming events

Wednesday: Health Check

• Review all open positions

• Look for early profit-taking opportunities

• Identify any positions that might need adjustments

Friday: Planning Day

• Close any expiring positions

• Calculate weekly performance

• Plan next week's new positions

The Three Biggest Monthly Expected Move Mistakes

Mistake #1: Ignoring the Event Calendar

Monthly options often include multiple market-moving events. A 40-day SPY option might face an FOMC meeting, jobs report, AND inflation data.

Fix: Map out known events before opening positions. Consider smaller position sizes if multiple big events cluster together.

Mistake #2: Not Having Adjustment Rules

With 30+ days remaining, you have time to fix problems. But you need a plan BEFORE you need it.

Fix: Decide in advance: "If my position gets tested with more than 21 days left, I'll roll the tested side" or "I'll close at 75% of premium collected."

Mistake #3: Concentrating Everything in One Month

Putting all your options trades in the same expiration month is like putting all your money on red at the casino.

Fix: Spread positions across at least 2-3 different monthly cycles. This smooths out the inevitable bad months.

Position Sizing for Monthly Cycles

The 3-Tier Approach:

Tier 1 - Foundation (50% of options allocation):

• 45-day iron condors on major ETFs

• Maximum 3% account risk per position

• Most conservative, most consistent

Tier 2 - Growth (30% of options allocation):

• 30-35 day individual stock plays

• Maximum 4% account risk per position

• Higher returns, accept higher risk

Tier 3 - Opportunities (20% of options allocation):

• Shorter-term plays on expected move dislocations

• Maximum 5% account risk per position

• Highest risk/reward, smallest allocation

Getting Started: Your First Month Action Plan

Week 1: Paper Trade Setup

• Practice the calculations on your platform

• Identify 5-10 liquid stocks/ETFs to focus on

• Map out the next month's economic calendar

Week 2: Small Real Money

• Start with ONE 45-day iron condor on SPY

• Risk no more than 1% of your account

• Document everything: entry, expected move, exit plan

Week 3: Add Second Position

• Open a 30-day position on a different underlying

• Practice the staggered approach

• Review how the first position is performing

Week 4: Complete the Cycle

• Close any expiring positions

• Add a third position with different expiration

• Calculate your first month's results

The Monthly Expected Move Mindset

Think in Probabilities, Not Predictions You're not trying to predict where stocks will go, you're positioning around where they're likely to stay.

Embrace the 32% Failure Rate
Even when you're "right" 68% of the time, you'll be wrong about 1 in 3 trades. Plan for it.

Consistency Beats Home Runs Monthly expected move strategies are about base hits, not grand slams. Target 8-15% monthly returns on deployed capital, not 100% gains.

Advanced Tips for Serious Practitioners

Volatility Surface Awareness

Different strikes trade at different implied volatilities. The expected move uses at-the-money IV, but your actual strikes might be different.

Pro tip: Always check the actual IV of the strikes you're trading, not just the theoretical expected move.

Seasonal Patterns

Some months are consistently more volatile (October, December) while others tend to be calmer (July, August).

Application: Adjust position sizing and strategy selection based on historical monthly patterns.

Your Expected Move Questions Answered

Q: How accurate are monthly expected moves compared to weekly?
A: Monthly moves are typically 70-75% accurate versus 65-68% for weeklies. The longer timeframe allows more events to normalize.

Q: Should I stagger entries or go all-in at once?
A: Always stagger. Deploy intended, properly allocated (position-size), capital weekly across four different cycles. This eliminates most timing risk.

Q: What if my position gets tested early?
A: With 30+ days left, you have options. Roll the tested side, convert to a spread, or close if your thesis changed. Have rules decided in advance.

Q: When should I take profits?
A: Target 50-75% of maximum profit when 15-20 days remain. Time decay accelerates in the final weeks, but so does risk.

The Bottom Line

Expected move isn't magic, it's math applied to market psychology. When you combine it with proper position sizing, staggered timing, and disciplined management, it becomes one of the most reliable tools in options trading.

The Monthly Advantage: Longer timeframes mean more time to be right, more opportunities to adjust, and more predictable time decay patterns.

The Staggered Edge: Multiple overlapping positions smooth out the inevitable bad weeks and create more consistent returns.

Start small, be patient, and let the probabilities work in your favor. The market will always provide opportunities for those prepared to recognize them.

Probabilities over predictions,

Andy Crowder

🎯 Ready to Elevate Your Options Trading?
Subscribe to The Option Premium, a free weekly newsletter delivering:
✅ Actionable strategies.
✅ Step-by-step trade breakdowns.
✅ Market insights for all conditions (bullish, bearish, or neutral).

📩 Get smarter, more confident trading insights delivered to your inbox every week.

📺 Follow Me on YouTube:
🎥 Explore in-depth tutorials, trade setups, and exclusive content to sharpen your skills.