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McDonalds Again And A Follow Up To Yesterday's Blog..

Option traders on Friday mornings just want to be in and out in the first hour or so of trading on short term options. In the second half of the day most of the action calms down. McDonalds sold off a little bit yesterday afternoon and firmed up a bit towards the closing. Could this "mostly downward trend" continue? Here is a partial look at some of the opening bell's activity. Today is a Friday however let us first look at how the stock traded yesterday. Now a look at it's trading pattern at 9:32.22 a.m. The McDonald stock jumped up $4.98 and the 317.50 Puts we followed all day yesterday which are now "out-of-the-money" acted accordingly. They shrunk in value. During the fist 2.22 minutes of trading they traded down to 34 dollars a contract. Now this. In the first three minutes of trading the stock jumped a bit and then started to come off a touch. These Call options where not attacting all that much attention. The bid and ask jumped up on no volume. ...
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Deere and Boeing, The Second Day In A Row With A 500 Point Day Decline

In this market environment playing the market has become for some traders an hour to hour exercise. Many investors shy away from this method of trading and consider it to be a fool's game. Yet at times opportunities present themselves that are just to good to ignore. First, here is how the markets closed out the day followed by where the DJI index was at at 1:30 p.m. this afternoon.
It got ugly quickly in the early afternoon. Here are a look at Deere and Boeing at that time.
Now for some afternoon Deere "Put" quotes. Deere spent most of the morning in the 398-399 range at which time the 400 series of Puts that were to expire that day traded down to $2.00 a contract. Can you see that?
Here is how this series of options closed on the day. Note the price swing in the day from an interday low of $200.00 per contract up to a high of $1,057.00 per contract.
This you might say was a one time blip. Yet what's going to happen to Put options on a stock in the $400.00 range just prior to the markets losing hundreds of points in the matter of two hours? It's not rocket scientist stuff. It actually happens and I am amazed that more traders are not tuned into this stuff. It's the leverage you get with options that have an expiry date only a few hours away. Yes it's high risk but when the bottom falls out of things like it did today the downward action is often swift, directional and decisive. It's like watching a train reck about to happen. The Boeing story today was much the same. Here is it's one day chart and a look at the action in the Puts. Notice that the 220 Puts were trading for $.50 going into the lunch hour. Look at how high they traded up to. One slice of the action here shows them going from $2.15 per contractto $6.30 per contract in only 26 minutes. Look at the chart below.
Look at the open interest and volumes of contracts traded today in this series of Puts. Boeing always has a large following. Option traders playing the downside watched the carnage happening all around them with glee and were able to make out big time on this one. **** to read yesterday's blog on Deere on the previous day scroll up to the top left icon.

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