Option Volatility And Earnings Report For October 27 - 31

Core Insights - Earnings reports are a major focus this week, with significant companies including Microsoft, Alphabet, Meta Platforms, Apple, Amazon, Coinbase, PayPal, Starbucks, and Exxon Mobil set to report [1] Earnings and Market Reactions - Implied volatility tends to be high before earnings announcements due to market uncertainty, leading to increased demand for options [2] - After earnings announcements, implied volatility typically decreases to normal levels [3] Expected Stock Movements - The expected price range for stocks can be estimated by adding the prices of at-the-money put and call options [3] - Specific expected price movements for various companies are outlined, with notable percentages for PayPal (8.6%), Alphabet (6.7%), Meta (7.1%), Apple (4.1%), and Amazon (6.7%) among others [4][5] Trading Strategies - Traders can utilize expected moves to structure trades, with bearish traders considering bear call spreads and bullish traders looking at bull put spreads or naked puts [5] - Neutral traders may opt for iron condors, ensuring short strikes remain outside the expected range [6] - It is advised to use risk-defined strategies and maintain small position sizes when trading options over earnings [6]