How to use this calculator
- Enter the current share price.
- Enter the implied volatility of the expiration you are trading (shown as "IV" on your broker's chain).
- Set the days to expiration.
- Read the result: the 1SD and 2SD move in dollars and percent, plus the upper and lower price bands for strike selection.
What it tells you: the price range the options market expects by expiration - so you can place strikes by probability rather than guesswork.
How this calculator works
The expected move turns a single implied-volatility number into a concrete price range. Because IV is quoted as an annualized percentage, you scale it to your expiration with the square root of time: 1SD move ($) = price × (IV ÷ 100) × √(DTE ÷ 365). That dollar figure is one standard deviation — the market's estimate of a "typical" move by expiration.
From there the bands are simple arithmetic: the 1SD band is the price plus and minus that move, and the 2SD band is the price plus and minus twice it. Under a normal approximation the underlying finishes inside the 1SD band about 68% of the time and inside the 2SD band about 95% of the time — which is why a strike sitting right at the 1SD level is roughly a 16-delta option with about an 84% chance of expiring worthless.
Using it for strike selection
This is where the expected move earns its keep. If you sell premium, the 1SD bands are a fast way to anchor your short strikes to a probability rather than a guess. A short put at the 1SD lower band has roughly an 84% chance of expiring out of the money; pushing it out to 2SD raises that to about 97.5% but collects far less premium. For an iron condor, placing both short strikes near 1SD frames a profit zone the market thinks holds about two-thirds of the time.
The bands also sanity-check directional trades: if your target sits well outside the 2SD move for your time frame, the options market thinks it is a long shot. And the "rule of 16" is the handy mental shortcut — a daily expected move of roughly IV ÷ 16 percent — for judging whether a single day's range is normal or a surprise.
Worked example
A fixed, hypothetical illustration — not live market data.
A hypothetical stock trades at $100 with 30% implied volatility and 30 days to expiration.
- 1SD move: 100 × 0.30 × √(30 ÷ 365) ≈ ±$8.60 (about ±8.6%).
- 1SD band: roughly $91.40 to $108.60 — about a 68% chance of finishing here.
- 2SD band: roughly $82.80 to $117.20 — about a 95% chance.
- Strike read: a short put near $91.40 is about a 16-delta, ~84%-OTM trade.
Common mistakes
- Treating the band as a ceiling. The stock closes outside the 1SD band about a third of the time — by design, not by error.
- Trusting the normal model in the tails. Real returns have fat tails, so 2SD-plus moves happen more often than 5% — keep risk defined.
- Using the wrong IV. Use the implied volatility of the expiration you are trading, not a generic 30-day or index figure.
- Ignoring events. An earnings report or FDA date inside the window can blow well past the expected move overnight.
- Confusing daily and to-expiration moves. The rule of 16 gives a one-day figure; this calculator gives the move to expiration.
Frequently asked questions
What is the expected move?
The expected move is the one-standard-deviation range that an option’s implied volatility implies for the underlying by a given expiration. Roughly speaking, the market is pricing about a 68% chance the stock finishes inside the 1SD band and about 95% inside the 2SD band. It is the options market’s estimate of how far the stock is likely to travel.
How is the expected move calculated?
This calculator uses 1SD move ($) = price × (IV ÷ 100) × √(DTE ÷ 365), where IV is the annualized implied volatility and DTE is calendar days to expiration. The percentage move is IV × √(DTE ÷ 365). The 2SD move is simply double the 1SD figure.
What does "1 standard deviation" actually mean here?
It is a probability band, not a hard limit. Assuming a normal/lognormal distribution, the underlying lands within 1SD about 68% of the time and within 2SD about 95% of the time. So roughly a third of the time the stock closes outside the 1SD band — expected moves are exceeded regularly, especially around news.
How do I use the expected move for strike selection?
Premium sellers often place short strikes at or just beyond the 1SD band: a strike at the 1SD level is roughly a 16-delta option, with about an 84% chance of expiring out of the money. Selling inside the band collects more premium but is breached more often; selling outside it is safer but pays less. The bands also frame where to set spread widths and profit zones.
Why calendar days (365) and not trading days?
Option implied volatility is annualized on a 365-day basis, so scaling to expiration with √(DTE ÷ 365) is internally consistent. The well-known "rule of 16" — daily move % ≈ IV ÷ 16 — instead uses ~252 trading days (√252 ≈ 16) and is a handy shortcut for one-day moves; it will not reconcile exactly with the calendar-day figure here, by design.
Is the expected move a guarantee?
No. It is a probabilistic estimate built from current implied volatility, which is itself a forecast that is often wrong. Real distributions have fatter tails than the normal model assumes, so large moves happen more often than 95% would suggest. Treat the bands as a guide, not a promise.
Why does my broker’s listed expected move differ slightly?
Many platforms derive the expected move from the at-the-money straddle price (often about 85% of the straddle) rather than the IV formula. The two methods are close but not identical, because the straddle bakes in the full volatility surface while the simple formula uses a single IV input.
Related tools and guides
Turn the bands into trades with the Cash-Secured Put Calculator or the Iron Condor Calculator, and see whether IV itself is rich with the IV Rank Calculator.
Not sure which strategy fits? Try the Strategy Finder, or look up any term in the options glossary. New to the concept? Start with What is the expected move?
Educational tool only. Nothing here is financial advice. The expected move is a probabilistic estimate from implied volatility, which is often wrong, and real markets exceed it regularly. Size positions accordingly.