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Nvidia And Last Day Friday Afternoon Option Trading

First, the five day chart on Nvidia. Look at the volumes of option trading in these Calls and Puts at noon on Friday. These options expire today. Now here is how the DJIA is doing at 12:01 p.m. Look at the huge number of Call options traded this morning. With markets up and the DJIA down what would logic tell us to do? Buy the Puts. Look at these two Put printouts on Puts that expire today. Look at how cheap the "out-of-the-money" Puts are. Experienced option traders know that the risks in buying these is high, to high to take serious. What's more inticing are the "in-the-money" Puts. In this case they are the 167.50 Puts. Let's now look at it's current one day chart at 12:15 p.m. Had you looked at the 167.50 Puts around 10:40 a.m. they were half the price they are now. Sure it's all somewhat of a guessing game however I want to point out than with one day options the timing of inflection points, meaning stocks making reversals on the day usual...
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"One-Day" Puts That Crazy People Can Play - Netflix

Read the previous blog first, about Exxon on Friday. The Puts on it's last day before they expire options increased in price in the last few hours of trading. So to did the Puts on Nexflix on that same afternoon. Can you see how it sold off six dollars in the morning trading session (the first chart below) only to rebound almost three dollars? Then the stock got tested again and this time it lost it's steam.
Then what happened? Well here are the 470 Puts at 12:08 p.m. which expire at 3:00 p.m. The stock looks like it is trading in a channel downwards. See the chart below.
What next?
Yes the stock continued to drop approaching the 3:00 p.m. deadline/ expiracy time date. Now look at the same series of Puts at 2:12 p.m. They were trading at $490.00.
Looks so easy right? Let's check out it's five day chart and it's year-to-date chart.
Yes on Friday it looked like it wanted to roll over. * Two things. The reality of trading short options like this. Lock yourself in a room and run a bunch of moniters. Lots of cool stuff can happen on a Friday afternoon. If you going to play in this market focus on stocks in this price range. You need a stock that can swing three or four dollars in one day. Lower priced stocks do not. Big swings at this time of the day - like plus or minus $1.00 swings in fifteen minutes often happen. At some point in time take your profits and turn off your computer. There will always be another trading day. ** On the following day Netflix was down after $12.00 mid afternoon. What a drop.
Keep all of this in mind the next time you are thinking of the stock. It can move quickly.

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