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Living on Kraft Dinner?

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 ...

Sept. 23 th. The DJI Up Over 800 Points and Caterpillar Jumps

I played Boeing Calls three times this week and won everytime. In a blog two days ago I reported I don't like playing options on Thursday that expire the next day. The reason being is that if you guess the wrong direction you will lose all your money. Failure is harsh medicine.That being said this time I was watching Caterpillar and it opened down as did the markets. Inflation report numbers came out and everyone got it wrong. I jumped in. Look at how it crashed on the opening.
I got in at 9:39 a.m. Look at the chart to see where the stock was at that time. Call me crazy. Here is a better "one day" look at the chart.
Now look at when I got in. I got in at 9:35 a.m. and paid $250.00 for one contract. The low on the day was $2.05 and that was before I got in. I had just made more than twice that amount in Canadian dollars paying Boeing so that's the way I justified my actions.
A drop of like six or seven dollars. For the first ten minutes after I got in I thought I was smoked! How could any stock rebound from a drop that large? Then it started to rebound ever so slightly and I just wanted my money back. The market could roll over and sink again. Anything could happen. In my quest to get out I fought with the option makers and cancelled two sell tickets before I got filled. Can you see above how that happened at 10:11 a.m. and at 10:21 a.m. I cancelled and resubmited a sell ticket? I was chasing the markets down. Finally at 10:21 a.m. I was out. Five minutes or so later it started to explode upwards.
Notice these options hit a high of $9.74 on the day and notice that only 125 contracts traded. Caterpillar has over 128,000 employees. Do the math. Only a small percent of them are playing options on their companies stock. Life is what you make it. Most people don't play options. Today I went to the races and I got spooked as the markets took a slight pause one hour into the morning trading.

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