Featured

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 ...
Post a Comment

A Friday Rally

It happened. Telsa jumped on a Friday which is something remenicent of what it would do back in 2020. Here is an extreme example of how an "out-of-the-money" Call option jumped from obscurity to being worth lots of money at one point during the trading session on Friday..
There was a little bit of chatter about how Telsa raised some of their prices modestly this week and then the D.J.I. jumped over 500 points on Friday. So here now is where this blog gets a touch tangential. On the close on Thursday this Call option was eight dollars and eighty cents "out-of-the-money" and closed at $.10 or ten dollars a contract. Who would be stupid enough to be spending money on this type of a contract which would expire the next day with the probabities of a payoff being so negligibly small? Or are they? Sometimes when I see people driving new shiny Mustang convertables I wonder if they got them by purchasing Ford Calls on a Thursday with one day to go for $2,000 and selling them for $30,000 the next day after the stock jumped. With a Friday pop it happens more often than you might think. So Telsa jumped $8.86 on the day. Look once again at it's five day chart. Can you see how on Wednesday and Thursday it was trading in the $165.00 range? Given where it once was, wouldn't there be a good chance of a quick rebound of three or four or five dollar on Friday morning? If it did, then the ten dollar Call options would at least double or even triple in price. In this case these Calls dropped from ten dollars per contract down to one dollar a contract just after the opening before rebounding back up to a high of 83 dollars. On a different note, here now is how the 165 Telsa Calls did on the day and the Ford Calls.
Fridays with 500 point rallies are days to be savoured. * Shopify Calls were the lucky ones this week.

Comments

Post a Comment

Popular posts from this blog

A Fireside Chat - One Year Options and Thirty Day Options. Which is Better?

Image
Some say to think small, not big. Trying to play Disney options is thinking big. It is a stock slighty out of favor. If we start with it's a three year chart, we will see it is down by about 50% over that period of time. Now it's one year chart. If the stock can break 110 in early 2024 the sky is the limit. It does have a lot of moving parts so anything could happen. Look at these Calls options one year out. One year in options buys a lot of time.They look reasonable. If the stock ever inched up to the $105.00 price level in the three or four months these options would jump up in price by about 50%. Even more if they had really good news. Yet it's the "what-if" aspect of the equation that castes such a trade in doubt. "What if" stories just don't cut it. There are to many variables in play. Then again, why are we even thinking of long-term Call options after a December's rally? Let's switch gears. If consumers are out spending for X-mas...
Read more

Trump Media Technology Options With Three Days To Go.

Image
On Tuesday just after 3:00 p.m the Trump Media Technology Options had stop traded again. What is the next 24 hours going to bring? Who knows. So many option traders follow this stock and most are afraid to buy either Call or Put Options on it because their premiums are so expensive. If Trumph wins the stock should soar and if he loses the stock will tank. The option premiums are priced expensively in both directions. Here now is how both the Calls and Puts traded on the opening today. First the Calls six minutes into the opening. Now the Puts. Now a look at how these options played the day. With a "stop trading" situation the option session ended a little bit early as evidenced in these following readings. Notice also how low the open interest number is in these Puts. Option traders for the most part opted to stay away from this situation. Now this. Trump wins. Here is how the 38 series of Calls traded just after the opening at 10:11 a.m.. The stock is up however the...
Read more

Living on Kraft Dinner?

Image
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 ...
Read more