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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 ...

A Surprise Caterpillar Jump on a Friday That Option Players Missed.

The action on Caterpillar on October 21st, 2022 defies logic. Here is it's five day chart showing Friday's action. Read On.
In the past I have said that it's stupid to be buying Call or Puts just before a Thursday's closing that expire the next day in anticipation of a rally or a sell off that day. The future market was down big time between 8:00a.m. and 9:00a.m. and then the markets opened flat and then took off. Look at how these for series on Caterpillar Calls traded on the day.
$.16 to $510.00
$.05 to $250.00
$.01 to a high of $.67. In hindsite, the tip off to this possibly happening was in the premarkets turning from negative to positive in a short period of time before the opening bell. This kind of action makes it difficult refocus. Now what I didn't show you was the 180 Calls. With the stock trading around 180 on the opening this is the option series you would expect most casual options traders to be playing. Look now at the suprisely low volume of trading on this series of Calls.
Only 146 contracts in this series traded on the day. Why didn't more players jump in?

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