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Why The First Two Or Three Minutes Of Trading After The Markets Drop Over 800 Points Can Be So Important To Option Traders.

Option traders already know this. The market sometimes pops on the opening after a large one day drop. Yesterday, a Monday it closed down over 800 points. The problem sometimes is that if you put in a ticket in the premarkets to get in on the opening, a "buy at market" ticket you risk getting filled at a ridiculously high price if the price of the stock opens with a gap to the upside. Let's look at how one series of Home Depot Call options traded on the opening. Today is a Tuesday. The low of the day on these Call options happened on the opening with a price of $6.46. The chart doesn't show this low priced sale happening. Let me try and explain how this happened. Look at this. Here is where it can get complicated. The chart above shows a spike at 9:00 a.m. Yet the markets don't open until 9:30 a.m. You can't trade options in the premarkets. If you submit a "buy-at-market" or "sell-at-market" ticket it sits on the books and gets an opening...
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LiveWire

My last blog was about Harley Davidson and what I didn't bring into the conservation was their spin off business which is building electric motorcycles. To be honest these bikes are not getting rave reviews. Two complaints are their crippling range and the possible issue of them being more dangerous to drive because they are so quiet. There is also competion from abroad. Last quarter they built only 63 of them and that experience is part of the company expecting to incur a loss of over $115 million this year. If you do the math each bike built cost them over $200,00.00. A $115 million dollar loss vs a profit of $1.3 billion for Harley Davidison. That loss makes a small dent in the overall big picture and in the process of getting going they used other people's money. Nursing this project to life from a business point of view has merit. Covid didn't help anything. LiveWire has to go slow until the product itself evolves to a level they feel proud to put their name on. Investors know this companies pedigree. See it's chart and read this.
Now go back to the previous blog on Harley Davidson. Put this puzzle together anyway you want. Forcasting of 750 units on the low end is still a three fold increase in production levels from where they are at now. Could they turn to be profitable in the next 1,000 days? Maybe. Yes there are options on LiveWire. Here are the Oct20th/2024 Calls with a striking price of 7.5 and 10 dollars. That's as far out as you can go and no one is trying to play them. The bids and asks are to far apart.
Keep in mind the company will continue to lose money all year. What a muddle. There are easlier games to play.

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