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A Random Walk In The Park On A Monday Morning. A Caution. Monday Mornings Are Often Not An Option Players Best Friend

Let's start with this. It's now 10:26 a.m. A bet on Caterpillar rebounding by the end of the week. There are no takers. Why have to watch the screen for the next four days in agony waiting for a rebound which if happens is just a "break even trade"? But Wait. I made a mistake. The market is actually now down 668 points. What else can we look at? Interactive Brokers. These kind of stocks always do poorly on days with the threat of margin calls. Yet there is something interesting about the printout I am about to show. It is that these options are "one-month-out" Calls. These longer term options trade differently than short term options. (these options trade in one month intervals). If the stock we are following stops it's freefall the value of the options will nudge up ten, fifteen or twenty percent. A seven dollar option Call might creep back up to $8.00 or $9.00 at which time it could be sold. In contrast with a five day option a slight reversal in ...
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Tuesday May 11th. A 473 Point Drop In The D.J.l. In One Day With "Mcdonald's" Options Up and Down

I went into Tuesday with a "McDonalds" "Put" which I sold at 10:04 a.m. I had bought it just before close on the previous day because I liked the chart. First here is it's five day chart followed by a one day chart.
The market tanked on the opening and I didn't wait long to get out At 10:00 a.m. it seemed to be on a rebound. See the chart. I got out once again at 10:04 a.m. Here is the ticket. Like they say, shoot first and ask questions later. The printout is difficult to read but it says out at $5.30 This traded netted me $150.00. I was ok with that.
Everything was down but the day was early. Were the markets oversold? I turned around and played the upside. Sometimes that can be the worst strategy in the world and I did it with two trades.
I liked what I was doing because I was trying to play a morning bounce after a sharp morning decline and my fills on these two trades were at 9:52 a.m and 9:55 a.m..
I got out ten or fifteen minutes later at 10:09 a.m., 4 @ 1.95. I only made a few dollars but I didn't want to hang onto them and see them role over. I was free from that position. Or was I?. At 11:47 a.m. I got the itch again to be back in, this time paying $147.00 each for two contracts, on the same series of "Calls" I just had just got out of at 1.95. At the end the day they closed out a price a touch lower. I can live with that.
Later on in the day when the market started to stop dropping I bought yet another "Mcdonald" 232.50 "Call" at 3:15 p.m., this time with a next's week striking price. I will have eight trading days to sit on it. One of the reasons I like "Mcdonald's" at this point in time is that more people are getting out which should be good for sales and "McDonald's" is not a stock prone to unusual news reports. To be buting in "Calls" on a day the market is crashing hoping for a next day rebound really only make sense after a couple of days of downward markets. let's see what happens.

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