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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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"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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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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