The expected return displayed already takes that into account. First, there is the shift along the vol skew curve. By that I mean that if the implied volatility IV of the November 150 ATM call is 23.5% and the IV of the November 151 call is 22.4%, when the SPY increases in price from 150 to 151, the fair value calculation assumes that the now ATM 151 call will have an IV of 23.5%. Second, the expected return calculations also takes into account the constant elasticity of volatility (cev). This cev factor is calculated using a linear regression over the actual changes of the past 60 days. It then uses that factor to project on large price moves (usually about 15 points or more on the SPX) how much the entire volatility skew curve will shift up or down (down in this case). This change in IV is then taken into account when calculating the probable fair value of the option, and thus the expected return. While both of these are taken into account, it is this second factor that measure the potential vol crush you refer to. By the way, the original question only asked about a rally, without really indicating its magnitude. Since we have had several intraday movements (difference between the day's high and low) in the past couple months of 4-4.8%, I just arbitrarily chose a projected move up of between 2.5% and 5% as the definition of rally.
yeah, it seemed as though it had tried to adjust for it, but my adjustment is different than yours. According to my valuations you are about $1,500 overstated. It doesn't really matter in the end anyway because the answer to the question is obvious. If the move is greater than 1 sigma, the OTM front month options are always going to outperform, given that theta loss isn't killing the delta gains.
That's how I do it. With an index it should be a relatively simple matter since the strikes are so dense. It's harder with stocks where the strikes are five points apart.