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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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"Apple" at 3:15 p.m.

Last week we talked about "Apple" being a nice stock to trade options on and one of the reasons given was it's one dollar spreads on it's option. Most other stocks in that price range have options on them which have wider striking prices. A 120 Call, a 122.50 Call and a 125 Call for example. That's what you are most likely to see. That being said, the underlying price swings with these "other stocks" needs more of a noticeable and extended directional move to be able to play them successfully. Weekend articles mentioned "Apple" doing well in a rising interest rate environment because of it's abilities to make money on borrowed money forming low cost debt. I wouldn't read too much into that. Today with the D.J.I up 90 points going into the closing trading hour of the day look at how well the 13 series of Call options that expire this week are trading. Up slow and steady all afternoon.
Notice also one again how the volume of daily trading in this series exceeds the open interest. That's always the way it is. The focus always seems to be on interday trading. ^^^^^^^^^ A Next day update. Notice how the market was down and the volumes of trading was way down.
All things considered the stock rallied again on the opening and then off slightly and these premiums dropped accordingly. Let's now look at how the "Puts" now looked on todays action, this time the 134 Puts and not the 133 Puts. Money can be made both ways.
You can see the low of the day on these "Puts" was about 1:20 p.m. when Apple spiked a touch.

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