The options market has prepared for bigger-than-usual moves in the stocks of a trio of trillion-dollar companies, the day after they report quarterly earnings results.
That’s because the implied volatility, or how much a stock can be expected to move over a certain period, of the stocks for Apple Inc. AAPL , Alphabet Inc. GOOGL and Amazon.com Inc. AMZN remain elevated, even as implied volatility for the S&P 500 index SPX has fallen to 13-month lows. A “straddle” is a pure volatility play that involves the simultaneous purchase of bullish options and bearish options , with the same at-the-money strike prices, or targets at current prices, and the same expirations dates. Buyers of straddles make money if the stock moves, in either direction, more than the implied expected range. Read more about straddles.
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