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Costco Is Flat In The Last Five Days.

Well it's actually had a couple of ten or fifteen dollars dips. Can you play it? Some would say why would you want to? If you look at the open interest in these two series of options below you will see that not many players want to. That in a sense that is a good thing. Here are two option series to look at. First the Calls that are set to expire this Friday. Now the Puts which are also expiring this Friday. Now here is it's chart a 10:05 a.m. If your looking for me to make some brillant comment as to what is going to happen next you might be in for a disapointment. All I want to say is that the markets had a bad day yesterday and the 980 series of Calls almost doubled in price on that day. My point is that these options have the potential (Tuesday options that expire on Friday) to make amazing moves. For example in a past blogs I wrote about Costco on March 7th this stock was down $69.60 on the day as I was writing about it! I have strong repect for these options. Recent...

Opportunities With A Stock Going Sideways. Moderna

Sometimes it's nice to have instructions. Here is how to cut down a tree.
If you want to learn about option trading you could start by watching options on a stock that expire one week out. Pick a striking price close to what the stock is trading at and follow how the option premiums move as the stock wiggles up and down. Get a feel for how much of a price change in the stocks price is necessary to move the needle on the options price. It's best to do this with stocks in the eighty dollar price range and higher because they are more likely to have price swings which are tradable. In this example we are talking about Moderna which seems to be in a sideway mode, waiting to break out. Here is it's five day chart.
Up and down,right? Here is how it traded today.
Now look at this. I will tell you what it is after you have looked at it.
It's a printout of how the 105 series of Calls on Moderna that expire at the end of next week traded today. They offered today enough action to get in and out at a profit if you bought on an interday dip. In some ways it's a silly game to play - the game of hoping for this sideways action to continue. They are two dollars "out-of-the- money" so they very well could end up expiring worthless next week. This is a high risk game but that's what option trading is. That's why with having six trading days of life in this series of Calls there is enough breathing room to ride the action. The exercise of option trading is finding sweet spots in the market which are playable. This is not a strategy to employ on options with only two or three trading days of time value left with them. The danger is that sideway moving stocks will at some point in time break out. That said, playing interday swings can be a profitable experience. *** Would I stay away from situations like this knowing only 167 contracts on this series traded today? Is it better to follow stocks like Tesla where the volumes of option traded in any one series is 100 times greater? In some ways it's better to swim in a sea of small sharks than it is to swim in a sea of big sharks. Now for a next day (Friday) look at this same action.
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Now this.
Notice the surge in the volume of option contracts traded? Notice that the stock really didn't do very much? It did however produce another opportunity to buy on the dip. Options with six or seven days of life still left in them are tradable. * Now an Oct 11th update. You might find it refreshing to see what they are now trading at (five days later) and look at how the stock has traded over the last week. It helps to validate this entire process.
Notice they hit a high of $2.38 on the opening. Can you see how a whole world of changes have happened over the last week. Can you also see how you get fair value when you purchase an option that far out.

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