GLOSSARY // Options
Implied Move
The implied move is the size of the swing the options market expects from an upcoming event, estimated as the at-the-money straddle price divided by the stock price, using the first expiration after the event. It is quoted as a percentage and read as plus-or-minus: direction unspecified, magnitude priced.
It is the cleanest benchmark for earnings trades. A long straddle profits only if the actual move beats the implied one; a premium seller profits if it falls short. Across a full earnings season, comparing implied moves to what stocks actually did is how volatility traders keep score.
A stock trades at $200 into earnings. The post-earnings weekly 200 call costs $7.00 and the 200 put costs $6.50, so the ATM straddle is $13.50. Implied move: 13.50 / 200 = 6.75%, roughly +/- $13.50. If the stock moves 4% on the report, straddle buyers lose and premium sellers win, no matter which way it went.
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Educational only — not financial advice. Definitions simplified for clarity; markets are messier than definitions.