Featured

"Tony The Tiger" - A Food Stock

The mood of Wall Street is now changing as the reality of tariffs is starting to kick in. Two weeks ago not so much so. Kelloggs had "so-so" earnings come out a few weeks ago and the stock exploded upwards. Note the very last line above mentions the effects of tariffs are not taken into consideration. So many stocks with "so-so" earning reports have jumped in price based on the "lets make America great again" slogan. Deere stock is shooting to the moon as I keep writing about in spite of declining sales in the last quarter. The sentiment seems to be that they are immune to tariffs. On paper they might be. Read this. Americans are struggling to buy gas, eggs and insurance. Total housing starts in the U.S.in 2024 were down 3.9%. Walmart, the recent darling stock in the last four weeks for Call option players woke up this morning with an earnings report which was healthy but with came with some caveats. Here is what happened. Perhaps the U.S. is starting ...
Post a Comment

Four Examples of How The Middle Day Of The Week Can be Turnaround Days When Options With Two Days Of Trading Life Can Surprise.

Have you noticed in recent trading sessions how five dollar swings in some stocks in one day now seem to be the new norm? First lets look at Caterpillar. Look at all of it's random five dollar daily price swings as of late.
Now look at this, a look at today's action in the $387.50 series of
Caterpillar Calls. Two details scream out at me. Look at how far apart the "bids and asks" are and secondly, look at how low the "open interest" numbers are. Sure you might get a fill if you split the difference between the "bid" and "ask" but it's going to take a five dollar move in the stocks price, in the correct direction in three trading sessions to cash out with any kind of a profit. It's not out of the question but it is a high risk trade. (It's earnings report comes out Oct. 28th which is to far out to impact the direction of this weeks trading). Using the stock Deere in the next example illustrates this same point. It's earnings report is still over a month away.
Only eleven contracts traded on the day. In other words, traders are reluctant to be buying into these whipsawing stocks. Yet there continues to be plenty of option trading volumes with three trading days to go for both Tesla and Nvidia. First Tesla.
It's rare to see Tesla trade sideways for three days in a row and it's nice to see a tight "bid" and "ask". Look at the volume of Calls on it traded today. The trading volume is huge.
At this stage of the game it is truly a flip of a coin. It's almost a case of buying both a Call and a Put with the hopes of a breakout in either direction. Yet then again it would have to take like almost an eight dollar breakout just to break even. If you follow Tesla you will know that a lot can happen in three trading sessions. Charts like this attract attention. So do pictures like this.
Now look at the current five day chart on Nvidia.
Now here is how the $132.00 series of Call options traded on the day.
The question in this case is this a chart which can rebound? It will be interesting to see tomorrows "open interest" numbers to see how many contracts will still be open on the opening. Option makers, given the large number of open interest contracts have a vested interest in keeping the stocks price below the $132.00 level on Friday's close which is once again three days way. Now here are these options on the opening. A 40% gain.
The open interest number is up showing that traders were moving into this position yesterday. How did these options close today, a Wednesday? The D.J.I.A. was up 337 points. Tesla was up $1.76 and the Calls closed up only a nickel at $3.90 or 1.3%. All of the other three stocks fared better. Deere was up $7.38 and the options we were watching closed at $8.00 or up 100%. Caterpillar was up $7.12 and the options up 78% and Nvidia was up $4.52 and it's options up 95%. As often mentioned, Wednesdays can be turn around days when short term option shine.

Comments

Post a Comment

Popular posts from this blog

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

The Little Engine That Could

Image
Walmart again. It's all I seem to blog about. Here is it's five day chart. The stock keeps going up and the option series are set up in one dollar spreads. Even a fifty cent move on the stock moves the needle on these Calls. Look at how this series of Calls was trading yesterday at 3:00 p.m.. Now here is this same series of Calls just before noon today. Thirty days of upward action like this punctuated by the off day of decline. Now notice the higher volume of trading in the series of Calls with the higher striking price. These are the ones's with more leverage. At the same time look at the five day chart on Costco. The two stocks sometimes trade in tandem. Humpty dumpty sat on a wall .... a had a great fall. Someday soon a fall might happen but what a great ride it has been.
Read more

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