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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 ...
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Ford Down Seven Cents On The Day Going Into The Closing

Is this an opportunity? Ford nearing the close on a Wedesday with Call options on it that expire in two days. First the five day and then the one day chart.
Now look at how the twelve series of Calls traded today towards the end of the day.
Now a different look at the same thing.
Note they closed the day before at $.23 cents and hit a high of $.39 cents. That was a trade in itself. Now what? Well the chart looks kind of ugly as it has not tested it's previous lows so jumping in to play the short term reversing upwards looks like a scary proposition. That plus buying into options that expire in two days often quickly lose half of their value if the stock ever decides to go sideways for a day. Most option traders overlook the potential of succeessfully of trading Ford options. Let's see how this situation plays itself out. I have talked about situation just like this several times before. One other note. Ford sales were up 7% last month, then to be revised to being up 11.2%. Is that a trend we can expect to see going forward? Probably. Here also are how other auto stocks traded on the day. It was a mixed day.
** What do I find unusual? The open interest number versus the number of contracts traded on the day. It tells us that not many option players are trying to daytrade it. Many option holders are stuck in them at higher prices. It's trading patterns are fickle. So many option traders pile into Tesla instead and hope for $5.00 or $10.00 price swings. That's a different game. One more topic is the topic of Ford Calls one week out. Do you need that much time? Not really. Yet think of the downward pressure that the next week out 12.5 series of Calls have indured. Here they are.
Look at the interest that they are attracting. News the next morning June 13th.
This is news which will be quickly discounted. Now a comment about this chart. It doesn't really scream at you to be considering the upside.

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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