Expected Move

What Is It?

Expected move is the range a stock is likely to trade within over a given time period, based on current implied volatility. It's the market's best guess at how far a stock will move — up or down — before your option expires.

For example, if NVDA is at $120 and the expected move for 120 days is ±$15, the market is saying NVDA will most likely trade between $105 and $135 over that period.

How It's Calculated

The formula is straightforward:

So if a stock is $100, IV is 30% (0.30), and you're looking at 120 days:

This is a one standard deviation move — meaning there's about a 68% probability the stock stays within this range.

Why It Matters for 120-Day Options

With our 120-day timeframe, we get a wider expected move than the short-term traders. This is actually an advantage — more time means more room for the trade to work, and time decay (theta) erodes more slowly on longer-dated options.

When picking strikes, you want your target to be within the expected move — that's where the highest probability trades live. A 20-delta strike typically sits right around the edge of the expected move, giving you a good risk/reward balance.

The Takeaway

Expected move tells you the playing field. If you're buying a call with a strike way beyond the expected move, you're betting on an outlier event. Stick within the range, pick your 20-delta strike, and let probability do the work.