l need to know the price target of where the underlying will be in a given time in future including binary events eg earnings, so can use option strategies around this price target. does IB have this ability? TOS and TastyWorks simply show you this number on the option chain of every time frame . IB surely has this ability? IB strategy scanner and probability lab seem like it depends on your personal view of where the price of underlying will be in future. thats not really helpful as my personal feelings of where a stock will be, like nearly everyone, is poor!
There are two very standard ways to estimate an underlying's price movement from current market info: • from option prices, given the current prices of ATM strangles, and • from current IV, and going ±1σ. Both of these have implicit assumptions about time and volatility that manifest in their utility the further in time you go. Both of these will give you a different range of prices. One of these is entirely a short-range, one-shot deal; the other responds to time with a (needed) curvilinear result. As Robert Morse observed, you have a job here. It is to • know both methods of Expected Move calculation, • know which one is incorporated by each of TDA ,ToS, and IB, • know which one carries your preference.
Yes, l know calculating sum of the ATM straddle gives ~ expected move. but does IB not have this calculated for you? or have a choice of showing it alongside the IV it has on the top right for every optionchain time frame like other top option brokers.
An implied vol of about .16 refers to an expected Daily move of about 1%. That is not the same as a “forecasted price.”
"Yes, l know calculating sum of the ATM straddle gives ~ expected move. but does IB not have this calculated for you? or have a choice of showing it alongside the IV it has on the top right for every option chain time frame like other top option brokers." Don't mistake popularity with utility. I was just reminded of this thread, referring to IB and a (then-)new data column: https://www.elitetrader.com/et/threads/time-weighted-vega-vs-inverse-square-root-vega.320991/
So the general plan is to forecast price based on historic volatility, ala: https://sixfigureinvesting.com/2018/11/predicting-price-ranges-with-historic-volatility/ and then take an options position based on current implied volatility, using something like IVRank. Set your strike(s) based on the first calculation. Sell options if IV is expected to finish above historic vol., and buy if IV is expected to finish below historic vol. Sounds simple, I'm glad I learned to stay the hell away from options a long time ago (too many parameters to get correct in order to make money.)