Featured

Living on Kraft Dinner?

What does the word disconnect mean? As a verb it means "to sever or interrupt the connection of or between; detach". Option trading - one day options - is a disconnect from the world. What happens to slightly "out-of-the-money" Call options on Costco when the stock shoot up thirty dollars on the day? I will show you what happened on Friday to Costco Calls and the options on a few other stocks I frequently watch. What a disconnect from the real world. But before that a look at how the indexes traded. 1) Costco. It's five day chart and a look at how three of it's option series moved upwards in one day. You may not know how to read these printouts but try to read the highs and lows on these option pricings. One printout shows an "at-the-money" option which means you are buying a contract on the stock, good for one day only at a locked in price equal to (or very close to) what the stock is currently trading at. The other two contracts shown are ...
Post a Comment

Slice and Dice Caterpillar and Tesla Options On A Friday Morning at 11:59 A.M. , During A Downward Moving Week.

This blog is about short term option trading on options which expire in less than one day. A proposterous proposition one might say. I agree, however if you are serious about learning how option trading works the following scenarios of what I am about present are all quite revlevant. Let me begin with the observation that there is next to no trading in Caterpillar Puts or Calls of these two series of slightly "in-the-money" or near to being "in-the-money" options as illustrated below. One of the things that this tells us is that there is no inside news of anything "in-the-pipelines" which might cause this stock to move up or down during the remainder of the afternoon trading session. Caterpillar as often mentioned before in previous postings is not big on making news releases. In contrast, Boeing activities seems to create some sort of news or a reaction almost every other day. Here is what the markets are doing as of 11:36 a.m. which is Friday April 12th.
Shown above is the 11:59 a.m.chart on Caterpillar. What's going to happen in the next four hours of trading? Look at how these Calls and Puts are positioned.
For interest only compare this activity to what is happening with these two series of Telsa one day left to go options just a few minutes earlier. Look at the staggering number of Call and Put options traded.
To be fair, nobody in their right minds would be trying to play any of this action. Or would they? What's going to make the indexes start to turn around? Overall it was a down week with inflationary fears in the air. Now let's look at the five day charts on both of these stocks. Both charts are ugly.
Now the end of day readings. The D.J.I. index keep falling.
In both cases the Puts went up in value and could have being profitable trades. Looking for end of the week rebound in a downward moving market is generally not a good idea. Jumping into the market at noon on a Friday when the D.J.I. is down 307 points looking for more downside action over the next few hours is something to consider. Looking at the closing charts at the end of the day very much supports those kinds of thinkings.

Comments

Post a Comment

Popular posts from this blog

A Fireside Chat - One Year Options and Thirty Day Options. Which is Better?

Image
Some say to think small, not big. Trying to play Disney options is thinking big. It is a stock slighty 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...
Read more

Trump Media Technology Options With Three Days To Go.

Image
On Tuesday just after 3:00 p.m the Trump Media Technology Options had stop traded again. What is the next 24 hours going to bring? Who knows. So many option traders follow this stock and most are afraid to buy either Call or Put Options on it because their premiums are so expensive. If Trumph wins the stock should soar and if he loses the stock will tank. The option premiums are priced expensively in both directions. Here now is how both the Calls and Puts traded on the opening today. First the Calls six minutes into the opening. Now the Puts. Now a look at how these options played the day. With a "stop trading" situation the option session ended a little bit early as evidenced in these following readings. Notice also how low the open interest number is in these Puts. Option traders for the most part opted to stay away from this situation. Now this. Trump wins. Here is how the 38 series of Calls traded just after the opening at 10:11 a.m.. The stock is up however the...
Read more

Living on Kraft Dinner?

Image
What does the word disconnect mean? As a verb it means "to sever or interrupt the connection of or between; detach". Option trading - one day options - is a disconnect from the world. What happens to slightly "out-of-the-money" Call options on Costco when the stock shoot up thirty dollars on the day? I will show you what happened on Friday to Costco Calls and the options on a few other stocks I frequently watch. What a disconnect from the real world. But before that a look at how the indexes traded. 1) Costco. It's five day chart and a look at how three of it's option series moved upwards in one day. You may not know how to read these printouts but try to read the highs and lows on these option pricings. One printout shows an "at-the-money" option which means you are buying a contract on the stock, good for one day only at a locked in price equal to (or very close to) what the stock is currently trading at. The other two contracts shown are ...
Read more