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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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Monday Morning Surges On The Opening.

I can't make this stuff up.
The open interest number was light. Not many people see value with holding Boeing Calls over the weekend. See it jump on the opening?
Caterpillar and Deere both did the same.
All of the "near-to-the-money" Call options on all three of these stocks doubled this morning. Yet you had to be in these option positions before the markets closed last Friday because of the "gap-to-the-upside" openings. This leads me to the following question. How comfortable are you in holding onto "one-week-out" Call options over the weekend? Why did all three of these stocks pop in tandem this morning, a Monday morning? One reason is that there is now a panic to be in the markets capitalize on this short term action. Call it a "Santa Clause" rally. That plus Bitcoin's recent sharp moves upwards screams to investors that maybe everything is priced to cheap. All that at a time when the CBOE volatitity index is rebounding off a two week decline. Boeing is hot with another rally on Tuesday morning.Look at these two charts.
Now what? The Puts? This kind of action is difficult to predict however at this moment in time there is a pause. Chasing the markets up and down on a minute to minute basis is not anyones ideal of a good time. Yet if your sitting on profits from the Boeing Call trade then it is something to consider.
One nice thing about option trading is that when you take breaks away from the action its all going to be there when you return. I will follow up with a look at how this situation unfolded. Now an end of Tuesday reading.
Now a closing reading on the Puts. Would you like to be in this situation right now? To be continued.

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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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