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Midweek Trading - The Week Following an 878 Point One Day Drop Last Friday. Walmart and Carvana Got Crushed On Thursday

The markets are shrugging off last week's big drop on Friday. As of late the markets have always seemed to have come back up again. Now a snapshot view of three different companies at lunch time on Wednesday. All are in strong upticks. Fighting strong stocks is a recipe for failure. It will be interesting to see what happens. 1) Trumph is busy changing the prices on drugs and other things. Most stocks in this sector have rallied over the last week or two. Only six contracts of Puts traded in the first half of the day on the "at-the-money" options on a morning the stock has jumped upwards almost fifteen dollars. There is a reason for this small number. Given the recent volatity of the markets in the last three or four sessions, traders are less willing to dabble in Put positions on individual stocks trading in uptrends. Caterpillar for example such a stock. It's up $42.00 in three days and traders are afraid to play it on the downside. 2) Walmart. What do you think i...
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A Fireside Chat - One Year Options and Thirty Day Options. Which is Better?

Some say to think small, not big. Trying to play Disney options is thinking big. It is a stock slightly out of favor. If we start with it's a three year chart, we will see it is down by about 50% over that period of time.
Now it's one year chart. If the stock can break 110 in early 2024 the sky is the limit. It does have a lot of moving parts so anything could happen.
Look at these Calls options one year out. One year in options buys a lot of time.They look reasonable. If the stock ever inched up to the $105.00 price level in the three or four months these options would jump up in price by about 50%. Even more if they had really good news.
Yet it's the "what-if" aspect of the equation that castes such a trade in doubt. "What if" stories just don't cut it. There are to many variables in play. Then again, why are we even thinking of long-term Call options after a December's rally? Let's switch gears. If consumers are out spending for X-mas why not think about going short on Costco (buying Puts) to catch the January blues? Yet then again with interest rates potentially going down and fresh money coming into the market why are we thinking of Puts? Look at this article.
Look also at how this stock is opening as of late. Why try and fight a strong stock? I have never witnessed a five day trading pattern like this.
Let's look at a thirty day chart.
So the question now is are 30 day Puts better than 90 day Calls? Not really. In option trading it's best to sit on the sidelines when you think the markets are going in the wrong direction. This week the markets are in a holiday mode but next week could be a different story.**** A next week look at the same situation. Costco is down a chunk. The Puts were where the action was at.
When a strong stock dips it sometimes goes right back up again. Short term dips in this stock historically have not lasted very long. **** Now a January 5th 2024 update. First Disney. Here is a look at it's 2024 chart.
In our discussion of long term Call options yes the 95 series of Calls on Disney expiring in 2025 would have paid off nicely. What about Costco. How did it do in 2024? Here is it's one year chart.
It had clear sailing all year. Buying Calls on it last year when the stock was trading around $665.00 would have paid off big time. Long term options can sometimes be your best friend.

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