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What does the word disconnect mean? As a verb it means "to sever or interrupt the connection of or between; detach". Option trading - one day options - is a disconnect from the world. What happens to slightly "out-of-the-money" Call options on Costco when the stock shoot up thirty dollars on the day? I will show you what happened on Friday to Costco Calls and the options on a few other stocks I frequently watch. What a disconnect from the real world. But before that a look at how the indexes traded. 1) Costco. It's five day chart and a look at how three of it's option series moved upwards in one day. You may not know how to read these printouts but try to read the highs and lows on these option pricings. One printout shows an "at-the-money" option which means you are buying a contract on the stock, good for one day only at a locked in price equal to (or very close to) what the stock is currently trading at. The other two contracts shown are ...
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Power Surges in Option Trading

If your an "Uber" driver working in the downtown core of major cities you know about power surges. If a subway breaks down and the system is broken hundreds of people suddenly need rides. At the very same time the rates you charge will spike up. That's the best time for "Uber" drivers to be out driving. Well playing options on stocks with a day or two to go until they are about to expire is kind of the same thing. Friday May 7th was one of those days. If we look at "Boeing" and "Caterpillar" we will see two examples of what I am talking about. First "Boeing" and it's one day chart and a look at it's 230 "Call" options and it's 232.50 Call" options. What specifically we are looking at is the highs and lows on the trading price of the option series. In the first case there are two sets of numbers. A low of .51 and a high of 6.90 and a low of .16 and a high of 3.40 That's the price swings of the options in one day.
Here now is a look at the "Caterpillar" "Call" options which mimic these same price movements. In this case we are looking at the 235 and 237.50 series of "Call" options and the numbers are a low of .80 and a high of 6.87 and a low of .18 and a high of 4.40
What was the juice that made for these staggering returns? Well in the case of "Boeing" is was the price drop that happened on the opening at 9:34 and in the case of "Caterpillar" it was the opening price drop that happened at 9:33 also on the opening. To catch it at it's extreme your timing had to be perfect. My timing of in at .60 and out at 1.81 on "Caterpillar" that I referenced in my last blog shows that my timing skills need some honing. Uber driver's take note. If your out driving on a Friday morning during one of your surges do what you do best and just keep driving. Don't be fiddling on your phone trying to make these kind of trades. The End.

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What does the word disconnect mean? As a verb it means "to sever or interrupt the connection of or between; detach". Option trading - one day options - is a disconnect from the world. What happens to slightly "out-of-the-money" Call options on Costco when the stock shoot up thirty dollars on the day? I will show you what happened on Friday to Costco Calls and the options on a few other stocks I frequently watch. What a disconnect from the real world. But before that a look at how the indexes traded. 1) Costco. It's five day chart and a look at how three of it's option series moved upwards in one day. You may not know how to read these printouts but try to read the highs and lows on these option pricings. One printout shows an "at-the-money" option which means you are buying a contract on the stock, good for one day only at a locked in price equal to (or very close to) what the stock is currently trading at. The other two contracts shown are ...
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