How to Calculate Expected Stock Moves | Trading Data Science

How do option prices tell us how much volatility the market is expecting? See more options trading videos: http://ow.ly/Laux6 Today, Tom Sosnoff and Tony Battista are joined by Mike "Dr. Data" Rechenthin, PhD from the Research Team as he explains how to calculate expected stock moves. By examining the amount of premium built into the option price, we can calculate how much volatility the market is expecting; the greater the volatility, the greater the expected move. Dr. Data lays out the math behind the move estimations and explains how to plug these formulas into a spreadsheet to give us an edge in trading. Math is the most feared four-lettered word around, even to Tom and Tony. Luckily the well dressed Dr. Data is here to show how to tame the beast and even use it to make money. Check out his segments on analysis and data manipulation to understand the reasoning behind our trades. You can watch a new Skinny on Options Data Science episode live and check out all previous episodes everyday at http://ow.ly/EoyGW! ======== tastytrade.com ======== Finally a financial network for traders, built by traders. Hosted by Tom Sosnoff and Tony Battista, tastytrade is a real financial network with 8 hours of live programming five days a week during market hours. From pop culture to advanced investment strategies, tastytrade has a broad spectrum of content for viewers of all kinds! Tune in and learn how to trade options successfully and make the most of your investments! Plus, access our visual trading platform, dough, to learn the basics of options trading and manage your portfolio! With hours of tutorial videos and unique tools on a simple, easy-to-use trading interface, dough.com is here to make learning how to trade options fun! Subscribe to our YouTube channel: http://goo.gl/s2bAxF Watch tastytrade LIVE daily Monday-Friday 7am-3:15pmCT: https://goo.gl/OTv3Ez Follow tastytrade: Twitter: https://twitter.com/tastytrade Facebook: https://www.facebook.com/tastytrade LinkedIn: http://www.linkedin.com/company/tastytrade Instagram: http://instagram.com/tastytrade Pinterest: http://www.pinterest.com/tastytrade/

Comments

1. @7:30 how do you calculate the current IV? Do you have to use the B-S formula?
2. Seems there is problem with the formula =NORMDIST((LN(B3/B1)/(B2/100*SQRT(B4/365)))). I am getting error msg, you have entered too few arguments for this function. Since NORMDIST has 4 mandatory arguments. Can you pls give me the corrected formula
3. should it be square root of 'n' divided by 250 or 365?..... thanks!
4. What do you mean by 16 delta?
5. In the second formula, the probability has 84% of chance to happen?
   How to make it 97% of chance?