S&P 500 Momentum Invesco ETF (SPMO)

Volatility Term Structure chart plots the at-the-money implied volatility across expirations, which are an invaluable tool in determining options strategies based on anticipated changes in volatility. Backwardation is when volatility slopes downwards. Contango is when volatility slopes upwards, and a large increase signifies investors are expecting large moves in the underlying, such as around earnings.

Historical vs Implied Volatility chart plots the forward-looking volatility against the realized volatility, which can enable traders to identify patterns in price movement. When implied volatility is high, it can mean option prices are inflated, and a low reading can imply options prices are undervalued. A large divergence between forward and realized can often precede a large move in the underlying market. Traders can add IV Rank and IV Percentile to the chart for additional context. Beneath the chart is total options volume and open interest, with volume peaks useful to predicting changes in market sentiment and the strength of the trend.

The Risk Reversal chart highlights risk and showcases opportunity by plotting the difference between downside demand (OTM Puts) against upside demand (OTM Calls). A positive risk reversal means that puts are more expensive than calls, which could indicate traders are paying a premium to protect against a downside move, such as institutions hedging their position. A negative figure means calls are more expensive than puts, which is common in a downtrend, some traders will take to mean the market is undervalued, and there is more to gain on the upside.