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Why The First Two Or Three Minutes Of Trading After The Markets Drop Over 800 Points Can Be So Important To Option Traders.

Option traders already know this. The market sometimes pops on the opening after a large one day drop. Yesterday, a Monday it closed down over 800 points. The problem sometimes is that if you put in a ticket in the premarkets to get in on the opening, a "buy at market" ticket you risk getting filled at a ridiculously high price if the price of the stock opens with a gap to the upside. Let's look at how one series of Home Depot Call options traded on the opening. Today is a Tuesday. The low of the day on these Call options happened on the opening with a price of $6.46. The chart doesn't show this low priced sale happening. Let me try and explain how this happened. Look at this. Here is where it can get complicated. The chart above shows a spike at 9:00 a.m. Yet the markets don't open until 9:30 a.m. You can't trade options in the premarkets. If you submit a "buy-at-market" or "sell-at-market" ticket it sits on the books and gets an opening...
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Ford - An Earning Report

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Ford is going electric, that's the buzz. We all know the story. Earnings just came out on the stock and the Call options jumped on the opening. If you were playing options you had to get out just after the opening. With option plays on earning reports that's usually the way to best way play them. First, I will show the prior day's action. There was a gap down on the opening and 94 million shares traded. That's a large number. People were cashing out after recent good times. Now here is a chart of Ford the next day and here is how two option series traded. Buy in at the close and sell out just after the opening. Look at how high each series traded up to just after the opening. The earning numbers were not all that great but it's the buzz about going electric. Ford is one of the better stocks out there to play earning report releases. ** Scroll up to the upper left and read my most recent blog on MacDonald's earning report.
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McDonald's And An Earnings Report

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I was sitting in the drive through line yesterday at McDonalds redeeming a free coffee sticker won from being there a few days prior. It was a long line up for mid-afternoon. I am not a fast food junkie. I found myself thinking of how the Domino Pizza stock was on a terror for much of last year but not so much now. When we were all locked in last year everyone was ordering their pizza. I was also wondered if they would now accept my little free coffee sticker as it was only thumbnail size. Then when I pulled up to the drive thru window I hit a patch of bees. Apparently for whatever reason they were enjoying being at that window. They gave me my free coffee. Boy it was busy there. I note in this option series that there were only 292 open contracts. That small number suprises me. Why didn't more option players see this coming?
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