CAT Puts

It's Tuesday at noon. Here are the Nio "six-dollar" series of Calls that expire this Friday . Now it's five day chart. Now a more detailed one day chart. Now Wednesday's closing numbers. This is not a good position to be stuck in. Can you see how in two days these calls lost half their value? To be continued. Now Thursday on the close. Can you see how exhausting it is to watch options in this price range. Now this. A jump of sorts on Friday morning. The six series of Calls on Nio closed the day at $.04. Can you see how they jumped on the opning to a high of $.07. It gets even crazier than this. Look at how the Puts got squeezed on the opening down to $.05 to then only rebound back up to a high of $.19. Can you really be buying $.04 options, or $4.00 per contract options on a Friday at the close expecting to make money? That is the question you have to ask yourself.

I have ignored this stock all year, not knowing much about it. The stock is Sandisk and it doesn't pay a dividend. Sometimes I think that the stock has gone up to much in price to quickly. Is trying to play it for the downside with one week Put options the way to go? Why try and play Puts on a stock that never seems to go down? Why not just ride the Calls up? The stock is up $52.00 on the day. At noon on a Monday here is what one series of it's "just-in-the-money" Puts look like. Do these premiums seem to be abnormally high? Yes. $59.00 dollars means $5,900.00 dollars per contract. If you are new to option trading stay away from these ones. Other stocks trading in this price range like Costco have options on them trading at much lower prices. Here is an example of what I am talking about. If we look back at a blog I did last week on Caterpillar you will see how much of the time premuim built into the pricing on these "one-week-to-expiring-options" decreas...

First it's chart. Then a look at one series of it's Call options at 9:48 a.m. Look at how they traded down to $.72 cents. Now this five minutes later. Now this another five minutes later. Would this be enough of a gain to take making it your first trade of the week? Here is how they closed on the day with the DJIA down 557 points on the day.

Nio was the tenth most actively stock traded by share volume on the NYSE this week. It often makes the top five list. It's a company making Electric vehicles. One caveat is however that a few years ago this stock was was trading at a much higher price. Ironically that's when it was losing a lot of money. Now it'starting to make money for the first time. Look at it's five year chart. The short interest in Neo is around 6% which is not that big deal. It's a difficult stock to play options on. All options on stocks in this price range are difficult to play options on. Also their monthly vehicle production numbers (which somehow miraculously appear on the very first day of each month) can be all over the map. New models are always being introduced while older models seem to disappear. BYD is also experiencing the same issue. Did the stock explode this week after releasing these production numbers? No. Here is it's one week chart. Here is how the "six-serie...

If your new to option trading you wil not have the courage to play "last-day-until-expiring options". I get that. Perhaps a mid week option trade would be better. Find a chart pattern that looks interesting and buy yourself a three day ride. Or safer yet, buy an option on Friday at the close with five days of trading life left in them. Correctly picking the right directional movement over such a time period would instill a feeling of confidence in what you are doing. If you fail in such an adventure what would I advise you to do? Give up? No. Study harder. Now let me throw this one at you. Here is a recap of a blog I posted yesterday where an option trade doubled in price in just less than ten minutes. In all fairness most newbie option traders would not be purchasing "out-of-the-money"Call options which expire in only a few hours. What I am about to say may sound a tad stupid. If you want to jump into the world option option trading Tesla is one of the top stocks...