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Costco Drops On A Friday Opening And McDonald's Goes Up

Here is what happened. Costco goes down on the opening. Charts like this is not pretty. McDonald's goes up. Confused? Why the interest in McDonald's? It's just junk food. If the market rolls over might this stock lose some of it's steam? Now look at these Puts? The volume of trading in them is next to nothing. Without knowing why it's going up makes the purchase of Puts too much of a gamble. Now lets look at these same Puts at 2:24 p.m. They got wiped out. What's Costco doing? Here is where things get interesting. The markets are still strong. Costco is down $74.24 around 2:23 p.m.! It's having a bad day but the stock now seems to be stabilizing. Now this. A look at it's Calls. Remember for retail option traders you're deadline to get out of these "last-day-to-expiring" options is 3:00 p.m. That's only 42 minutes away from the time of this printout.That doesn't give these options much life. Now consider this, after such a se...
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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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