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

Deere. One Issue With Thinly Traded Call Options On Stocks In The $450.00 Price Range That Expire in Four Days

It's chart. It's Tuesday morning and the stock Deere has being going sideways for a few trading sessions.
Let's now focus on the "bid and ask". Look at the spread and think back to the "bid-and-ask" on the stock Walmart I wrote about yesterday. The spread (the "bid and ask") on options on Walmart yesterday was like two pennies ( "bid $1.04-ask $1.06") at 10:09 a.m. which can be a very turbulent period of time.
It's late in the morning trading session well past the first hour of morning jitters. If you want to buy in on Deere Calls what would you be willing offer? $3.50.? That's only a guess. If you want to sell what would be the suggested selling price? This wide spread (a spread of $3.26 dollars) is a total turnoff. Now this. A look at the trading action near the end of the day on this same options postion. Here are it's one day and five day charts. The markets are off and the stock Deere now is up.
Now the same 440 series of Deere Call options at 3:49:00 p.m.
One final conclusion which can only be verified by repeated observations. We are afterall not not privy to how logarithms work. When you see the spread on Call options increase to preposterous proportions on stocks in the $450.00 price range with four days left to go before expiring you can be assured that there is some kind of action happening in the background causing a push to go up.

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