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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 ...
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Netflix and the Future Value of Income Streams

Netflix had news.
On the release of this information the stock jumped and here is where it gets really crazy with "out-of-the-money" Call options that expire in two days. Call it insane. What I am about to show are random samplings of this action.
For years now articles have being written on the Netflix business model and what bothered market pundents was how they were losing money on customers giving away their access codes to other users. Other questions. Do upticks like this trigger automated tracking systems set off alarms that catch jumps like this within seconds of these meteoric liftoffs? Do C.E.O's tell their son-in-laws of this impeding action. Did the fellow driving the Porche 911 in front of you buy it with the profits made from acting on insider news? Can you buy Disney or Roku tomorrow and catch similiar gains? In two recent blogs this week I talked about Boeing Calls jumped in price on Biden news about how he was handling one days news on the debt crisis and how Harley Davidson had great earning reports only to watch the stocks price drop on spurious comments about potential headwinds ahead. Were such comments warranted? The markets are full of trickery. Things to think about when you are on the bus in the morning beating yourself up because you wasted money on a Starbuck coffee. Look, option trading isn't for everyone but I am hoping that little blogs like this will raise eyebrows.

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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 ...
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