Our Volatility Tool Points to Profit Target

Let’s walk through two common sense examples:

1. When options expire in 5 days, it’s fair to assume the expected move is lower than a stock that expires in 555 days.  More time = more potential of movement.
2. A stock with extremely low volatility would most likely have an expected move much smaller than a stock with high volatility.   More uncertainty = more potential for movement.

Volatility Visualizer (VV) analyzes an options expected move for the week, as well as a stocks expected move for the month.

For our Breakout Trade Scenario – we want names that have busted through weekly ranges but not yet taken out the monthly expected move levels.

Traders should use the Implied Volatility lines found through the VV as key points for support and resistance.

In Friday’s Breakdown session with Pablo Lucena, traders walked through an example in Paypal (PYPL) because this name was seeing lots of Unusual Options Activity on our Options Scanner, but the Volatility Visualizer scanner had also caught the name as a potential breakout trade.

This 10-minute video does a great job of explaining the breakout scans using the Volatility Visualizer scanner, as well as key resistance and support levels trades should be using to manage their options position.