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A Random Walk In The Park On A Monday Morning. A Caution. Monday Mornings Are Often Not An Option Players Best Friend

Let's start with this. It's now 10:26 a.m. A bet on Caterpillar rebounding by the end of the week. There are no takers. Why have to watch the screen for the next four days in agony waiting for a rebound which if happens is just a "break even trade"? But Wait. I made a mistake. The market is actually now down 668 points. What else can we look at? Interactive Brokers. These kind of stocks always do poorly on days with the threat of margin calls. Yet there is something interesting about the printout I am about to show. It is that these options are "one-month-out" Calls. These longer term options trade differently than short term options. (these options trade in one month intervals). If the stock we are following stops it's freefall the value of the options will nudge up ten, fifteen or twenty percent. A seven dollar option Call might creep back up to $8.00 or $9.00 at which time it could be sold. In contrast with a five day option a slight reversal in ...
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Buying A Stock After a Material Change of Events

Please listen to this logic. The week before last Krispy Kreme jumped on the Friday and ended up $2.76 on the week. The news was that the donut chain will begin to sell its products in most of the country's 14,000 U.S. McDonald's locations, requiring up to 30 new backeries to boost output.
Here is a look at it's ninety day chart.
Now here is a chart of how it traded last week.
With so many things to watch of higher quality I am not a fan of following this stock. My point however is to add stocks like this to your radar screens after major events like this. Why? Well the odds become greater of a second wave of buying kicking in. Look at the volume that poured into next weeks 15 series of Call options on Friday.
On Thursday they were trading for considerably less and notice that these were positions opened and not then sold out on the same day. Once again my point is not to be afraid of chasing action like this and it makes sense that it would pop again on a Friday. The decimation of good news is afterall a process of a delayed reaction. A Monday morning 11:02 a.m. look at the same story.
To be continued.

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