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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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Playing a Bounce After a Five Hundred and Forty Three Point Selloff

Yesterday we looked at the drug stock Moderna as the stock dropped eighteen dollars and twelve cents in one day on no real news and we were following two Call option series, one being "near-the-money" and one being "out-of-money". Today the market dropped another big chunk.
Stay away correct? Well kind of. If a stock drops eighteen dollars on one day and if most stocks had large losses what might you consider at do at 3:59:52 p.m. on the day of this fall? You might consider buying "in-the-money" Calls waiting for an uptick on the opening. We talked about the 185 Calls and the 200 series of Calls. The stock closed if you remember at $186.40. Why Moderna and not look at Calls on stocks which dropped by a lessor stock amount? Well eighteen dollars is enough of a drop to attract bargain hunters. Here is what happened on the opening today and here is how the 185 Calls looked in the early morning trading. The stocked bounced to over 190.00 in the first few minutes of trading after closing at $186.00 and look at how high the Calls traded up too.
They closed at $10.00 opened at $11.00 and went as high as $13.10. That was a trade. If the market had of rebounded it would have popped up more. Look at how the stock went on the trade on the remainer of the day.
Will the 175 Calls get a slight bounce on the opening tomorrow opening? A dead cat bounce? The answer is probably no as there is not much to get excited about on the upside at this point in time. There would have to be some good news for the industry. Something to cause some confidence to start to buy in.

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