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Opportunities Presented by Options on $30.00 Stocks.

Let's start with this chart. It's Pfizer. Would you have expected a pop like this, this morning? Now look at what the Call options did. I don't want to get into a discussion of "Can you read charts" however after one nice rally yesterday and second follow up rally could be expected. The 29.50 series of Calls doubled on a strong opening this morning. "Out-of-the-money" Calls on stocks in the thirty dollar price range call sometimes suprise.
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Turning $60.00 Into $120.00

What a stupid thing to be blogging about however sometimes you have to write about simple things to make a point. Option trading does not require a huge amount of money. $60.00 will do. It let's you purchase a couple of soon to be expiring out-of-the-money Calls or Puts on stocks under lets say fifteen dollars. Options on more expensive stocks will cost more. Now look at the Ford chart for the last five days. Ford is on fire.
So if someone threw $60.00 into Call options two days ago.... well look at what happened. Two days ago at 10:13 a.m. I bought six slightly out-of-money Calls on Ford at six dollars per contract (U.S. dollars) plus commissions. That cost be just over $60.00 Canadian.You could be trading like this also however the trick is in knowing which battles to play.
As Canadians we get ripped off on commisions on low cost options like this with a one dollar per contract surcharge. I have talked about this issue before and I do not want to go there now. Today I sold them five minutes into the trading session once I got my double. Here is part of the selling ticket. I got out at twenty dollars a contract.
I doubled my money which was my objective. $120.00 U.S., not $120.00 Canadian. There is a difference. Now wait, look at this. It shows how these Call options closed the day. Ford jumped up just over 5% on the day. Action like this only happens a few times a year. A six dollar a contract jumped to sixty two dollars in two days and I missed out on most of the action. Welcome to option trading.
On a different note I like Neo the electric car making company in China. The stock is off from its lofty prices of only a few years ago. What I recently learned is that when they sell a new car they actually rent out the batteries separately. It helps to lower the cars price and it helps to take the anxiety out of costly replacement issues further down the road. Smart thinking. Finally if you have the time read this. Telsa is in a sweet spot.
** I have registered Fordputs.com as I have mentioned in a previous blog. It is summer and I think I will wait until the fall before I commit to the the exercise of more blogging. Stocks in this price range can be volatile which makes option trading on them all so interesting. ** Here is how this series of Calls ended the week.

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