How Using Options Predicts Profits – Part 2

By Karim Rahemtulla In yesterday’s Trade of the Day, we focused on how to calculate the move expected in a stock after its company releases earnings.
Here’s a refresher:
Take a look at the stock price and choose the options that have the closest expiration and the closest strike price to where the stock is trading. Do that for both put and call options.
Then add up the price of the put and the call, and divide that number by the current share price. That gives you a percentage approximating the move expected by the market.
As an example, take stock “X”…
Assume the shares for stock …read more