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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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"Out-of-the-Money Calls" (With Two Days To Go) on Tesla

What are the odds on a Wednesday morning of Telsa sitting at $275.00 jumping to $300.00 by Friday of this week? One or two percent at best? I am just picking that number out of a hat. So here is the thing. Short term "out-of-the-money" Calls can be amazing trading vehicles. If you new to the option market for the first time it should not be something that you should be thinking of doing. First todays five day chart on Telsa.
The stock enjoyed a modest opening bounce. Well actually it was one of the best bonces it had in five days. Now look at how the "out-of-the-money" 300 Calls bounced.
Crazy and off-the-wall you might say? In my July 10th blog entitled "A Gamma Squeeze" I provided a statistic which says that Telsa and Apple combined make up 42% of the option trading volume set to expire on any given Friday. (This may not always be the case however it currently is). This tells us two things. First the liquidity is there to make these kinds of trades. Secondly, whether you like it or not this is the new reality of option trading. Illogical, bizarre trading you might say? Maybe, maybe not. It's action like this so many traders are successfully chasing. ** Here now is how these Calls options closed on the next day a Thursday leaving them with only trading day to go. Guess how much they are trading at?
Now here is the lastest action ging into a Friday morning. Look at the volume of Calls traded in this one series. It is a series $1.10 cents "out-of-the-money".
Telsa was uo today. Will the rally carry over into tomorrow's action? Let's wait and see.

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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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