Why Expected Move Is the Most Underrated Tool in an Options Trader’s Playbook

If you’ve ever looked at an options chain and thought, How do I know where to place my strikes?, Is this premium worth selling?, or What’s the market really pricing in here? — you’re asking the right questions. And the answer, more often than not, comes down to one thing: expected move.

Expected move isn’t some academic formula tucked away in a textbook. It’s one of the simplest, most powerful ways to anchor your trading in probability rather than prediction. And once you understand it, you’ll never place a trade without it again.

Let’s walk through what it is, how to use it, and why it can turn random trades into structured, repeatable outcomes.

What Is Expected Move?

At its core, the expected move is the range the options market believes a stock or ETF will trade in over a given period — typically with 68% confidence. It’s a reflection of implied volatility and time — and it’s already baked into the prices you see on the options chain.

And here’s the best part: You don’t need a PhD to calculate it.

The Simplest Way to Estimate Expected Move

1. Look at the at-the-money (ATM) call and put for your chosen expiration.

2. Add the premiums together.

That’s your rough expected move.

Example:

Let’s say stock XYZ is trading at $100.

• The $100 call is priced at $2.80

• The $100 put is priced at $2.90

Add them up: $2.80 + $2.90 = $5.70

That means the market is pricing in a $5.70 move — up or down — between now and expiration. So the expected range is roughly $94.30 to $105.70.

That’s the zone where the stock is expected to land about 68% of the time — based on current volatility levels.

Yes, there are more precise ways to calculate expected move using implied volatility and the square root of time. But for most traders, especially if you're selling options in the 7–45 day window, this method works beautifully.

Why Expected Move Matters (A Lot More Than You Think)

Understanding expected move allows you to stop guessing and start structuring. Here’s what I mean:

1. It Helps You Sell Smarter Premium

Let’s say you’re considering an iron condor. Instead of blindly selling random strikes, you can now position them just outside the expected move.

Using another example:

• Apple (AAPL): $212.50

• Expected move: $± 16.66

• Range: $195.84 to $229.16

Sell the $190/$185 bull put spread and the $240/$245 bear call spread. You’ve now placed both spreads outside the range the market thinks AAPL will land in. Statistically, that gives you a higher probability of both sides expiring worthless — and you’re collecting premium on both ends of the trade.

This is how you stop trading like a gambler and start trading like a casino — offering odds, not taking them.

2. It Prevents Overreaching on Directional Trades

Let’s say you’re bullish and want to buy a call. You’re targeting a $10 upside move.

But the expected move is only $5.70.

That tells you the market isn’t pricing in that much movement. So either:

• You're overpaying for the potential payoff, or

• You’re betting on an outlier move that only happens about 15–20% of the time.

Now you can step back and ask: Would a put credit spread make more sense here? You stay directional, but you structure the trade with better odds and more favorable time decay.

This is how professionals think. We don't force trades — we let the probabilities lead.

3. It Gives You a Map for Trading Around Events

Before earnings or Fed meetings, implied volatility rises — and so does expected move. After the event, volatility tends to collapse.

This is where understanding expected move becomes gold.

If the expected move on Netflix heading into earnings is $15, that gives you a reference. Can you sell a strangle or wide iron condor around that level and structure the trade to benefit from volatility crush — even if the stock doesn’t move much?

Professional earnings traders do this every quarter. They don’t just guess the direction — they build trades around the range the market is pricing in.

Click here to learn more on how I approach earnings trades? 

Don’t Fall Into These Common Expected Move Mistakes

Even though expected move is simple, traders misuse it all the time. Avoid these traps:

❌ Mistake #1: Thinking Expected Move Is a Guarantee

It’s not a guarantee. The market moves beyond the expected range about 1 in 3 times — and that’s by design, not exception. That’s why smart position sizing matters: when you're wrong, make sure it doesn’t cost you much.

❌ Mistake #2: Forgetting That It Changes

Expected move is based on implied volatility. If IV spikes or drops mid-cycle, the expected move shifts too. Always recheck your numbers if something big happens — especially after major news.

❌ Mistake #3: Using It In Isolation

Expected move is powerful — but it’s not the only tool you need. I always use it alongside IV Rank, liquidity screens, RSI extremes, and market breadth. Think of expected move as your foundation — and build from there.

Matching the Right Timeframe to the Right Strategy

Expected move isn’t one-size-fits-all. Use the right timeframe for your trading horizon:

• 1-Day Expected Move: Best for binary earnings plays

• 1-Week Expected Move: Ideal for weekly spreads and fast-moving setups

• 30-Day Expected Move: My go-to for swing trades and iron condors

• 90-Day Expected Move: Great for structuring long-duration trades (like poor man’s covered calls or wider diagonals)

Shorter timeframes give you more opportunity — and more noise. Longer timeframes smooth things out but introduce other risks (like macro news and theta decay). Know which you’re playing.

Final Word: Structure Over Prediction

Here’s what I tell every trader I work with:

Expected move lets you do exactly that. It gives you a framework for building smarter trades — trades that don’t rely on a crystal ball, but on how the market is already pricing risk.

In other words, it helps you stop hoping — and start operating.

If you’re selling options, managing earnings trades, or simply trying to improve your edge, make expected move part of your routine. It’s simple, it’s powerful, and it works.

Looking to Put This Into Practice?

Every week inside my premium service The Implied Perspective, I break down trades based on expected move, IV crush, and probability — with live portfolios and step-by-step alerts across multiple services. If you're looking for a place to learn and trade alongside someone who’s done this for over 23 years, I invite you to join me.

No fluff. Just structure, probability, and smart trade design.

Probabilities over predictions,

Andy Crowder

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