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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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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.

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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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