One stock is up this week. Everything else is bleeding. That is not safety.

Look at the tape this week.

Meta down. Nvidia slipping. Google off. Financials finally rolling over after holding up for two weeks. S&P headed for its fifth straight losing week.

And then there is one name. Sitting right at the top. Untouched. While everything else is getting taken out.

You want to call that strength. I want to call it a target.

In a volatile market, the expected move is the single most important number you can look at before placing any trade. 

The expected move is the at-the-money straddle price, meaning what you pay if you simultaneously buy a call and a put at the current stock price.

That number tells you what the options market is actually pricing in for movement in a single session. What it is pricing in. Not what it hopes.

Every stock has an expected move. Every day.

When a name hits the upper edge of its expected move consistently while everything around it sells off, that divergence is not random. The algorithms see a stock that has not correlated with the sell side activity.

They see a trillion-dollar company that has not been hit. And eventually, late in the week, they go get it.

I call it the lone wolf. The name that held while the rest of the pack got taken out. The lone wolf always gets found.

This is not a prediction about any specific name. It is a framework I have been using for 25 years in volatile markets.

When they hit them, they hit them all. The expected move tells you which ones have not been hit yet.

Here is what that looks like in practice.

Apple had been hitting the upper edge of its expected move every single day while the rest of the market was bleeding. The expected move on Apple showed a specific range for the session. 

I watched the stock hold the upper edge again and built a put vertical spread around the level where it would have to go if the lone wolf finally got found.

A put vertical spread means you buy one put at a higher strike and sell a lower strike put against it. 

The sold put offsets the volatility drag of the bought put. Instead of paying full premium on a naked put, you are collecting part of the implied volatility against you.

I bought the 255 put and sold the 252.50 put at $1.02. The spread closed at $1.75. That is 71.5% on the trade that lasted 20 minutes. 

Not because I predicted Apple. Because the expected move told me where the edges were, and the spread structure let me build around them without getting destroyed by the vol.

That is the framework. The expected move tells you where the edges are before the session starts. You do not need to guess. You need to go look at what it says.

Don't think. Just go look at what the expected move says.

To your success,

Don Kaufman

P.S. The volatility bump in the market is making it easier to get quick wins. Earlier today I closed out my AVGO Superfly trade for a one-day gain of 260%. Learn more about Superfly here.