Why the “Expected Move” Is the Most Important Metric Nobody’s Watching

Don Kaufman here.

Let’s get into something I think every trader needs to understand but barely anyone talks about: The Expected Move.

Now, I know what you’re thinking—“Don, isn’t that just some number the market spits out? 

What am I supposed to do with it?” 

Listen, if you don’t know how to use the Expected Move, you’re flying blind out there. 

This number is everything. 

It’s not some line on a chart—it’s the roadmap for how the market is pricing risk. 

And if you’re not watching it, you’re going to get crushed by the very thing that’s driving the market.

So today, I’m going to break it down for you: what the Expected Move is, why it matters, and how it can change the way you look at trading forever.

What Is the Expected Move?

Alright, let’s start with the basics. The Expected Move is just a statistical calculation of how much the market thinks a stock or index is likely to move over a given period. It’s derived from options pricing—more specifically, the implied volatility of those options.

But here’s the thing most people miss: The Expected Move isn’t a prediction—it’s a probability. It tells you where the market thinks there’s a 68% chance (roughly one standard deviation) that the stock will land by the end of the period.

Example time:
Let’s say SPX has an Expected Move of $50 for the week. That means the market is pricing in a 68% chance that SPX will close somewhere within $50 above or below the current price by Friday.

Sounds simple, right? 

But here’s where it gets interesting…

Why the Expected Move Matters More Than You Think

The Expected Move isn’t just a number—it’s a reflection of everything the market knows right now. Earnings, economic data, geopolitical risk—it’s all baked into that number.

And here’s the kicker: When the market breaches the Expected Move, that’s when things get wild.

Think of the Expected Move as a line in the sand. When the market stays inside that line, everything’s business as usual. 

But the moment we step outside it? 

That’s when traders start to panic. 

It’s like stepping into uncharted territory—nobody knows what’s coming next, and that uncertainty creates volatility.

Breaching the Expected Move: Why It’s a Game-Changer

Let me tell you something I’ve seen time and time again: when a stock or index breaks outside its Expected Move, it’s not random. It’s a signal.

Here’s why:

1. Market Makers Are Hedging:
   When the market breaches the Expected Move, it forces market makers to adjust their hedges. That can create a cascade of buying or selling, depending on the direction of the breach.
   

2. Momentum Kicks In:
   Once we’re outside the Expected Move, momentum traders jump in, amplifying the move even further.
   

3. Volatility Expands:
   When the market realizes it underestimated the risk, implied volatility spikes. That means options prices go up, and the cost of hedging gets more expensive.
   

It’s a domino effect, and if you’re not paying attention, you’re going to get caught in the middle of it.

How to Trade Around the Expected Move

Now that you know what the Expected Move is and why it matters, let’s talk about how to use it in your trading.

1. Use It as a Risk Gauge

The Expected Move gives you a baseline for risk. If you’re trading a stock with a $10 Expected Move for the week, you know that’s the range the market expects. If you’re setting stops or targets, use that range as your guide.

2. Watch for Breaches

When a stock or index breaks outside its Expected Move, pay attention. That’s when the real action starts. If you’re in a position, be prepared to adjust. If you’re looking for an entry, it might be a signal to jump in.

3. Trade the Extremes

When the market breaches the Expected Move, volatility often spikes. That’s a golden opportunity for strategies like selling premium (if you know what you’re doing) or buying into directional momentum if you think the move will continue.

Why Most Traders Ignore the Expected Move

Here’s the truth: most retail traders don’t even know what the Expected Move is. And even if they’ve heard of it, they don’t know how to use it.

Why?

1. It’s Not Flashy:
   Let’s face it, the Expected Move isn’t as exciting as chasing the latest meme stock or trying to time the next big breakout.
   

2. It Requires Discipline:
   Using the Expected Move effectively means sticking to a plan and managing your risk. That’s not sexy, but it works.
   

3. Nobody Teaches It:
   You won’t find the Expected Move in most trading courses or books. It’s one of those things the pros use but rarely talk about.
   

The Bigger Picture

Let’s zoom out for a second. 

The Expected Move isn’t just a trading tool—it’s a window into the market’s psychology. It shows you where the market is comfortable and where it’s not.

Right now, for example, we’re seeing massive moves in implied volatility, driven by uncertainty around CPI data, earnings, and geopolitical events. 

Those spikes in volatility are directly tied to the Expected Move. And if you’re not watching them, you’re missing the bigger picture.

How to Start Using the Expected Move Today

If you’re not already tracking the Expected Move, here’s how to get started:

1. Look at the Weekly Expected Move:
   Most brokers display the Expected Move on their platforms. If yours doesn’t, you can calculate it using the options chain.
   

2. Overlay It on Your Charts:
   Mark the Expected Move on your charts as a visual guide. Watch how the stock or index behaves as it approaches or breaches that level.
   

3. Use It to Manage Risk:
   Whether you’re trading options, stocks, or futures, use the Expected Move as a baseline for setting stops, targets, and position sizes.

The Key Takeaway

Here’s the bottom line: The Expected Move is your roadmap to the market. If you’re not using it, you’re trading blind.

And speaking of opportunity, tomorrow at 1 PM ET, Gianni Di Poce and I are going live to reveal our Post-Election Master Plan—a step-by-step strategy to turn $250K into $1.25M. This isn’t just theory—this is the real deal.

If you want to learn how to combine precision stock-picking with my proven options strategies to take control of your money and your future, click here to join us LIVE at 1 PM ET on December 11. Don’t sit on the sidelines while others cash in.

To your success,
Don Kaufman