Featured

Does It Look To You That McDonalds Is Gaining Legs Again?

Here is it's three month chart. Let's add some flavour. Let's pull up the details of a April 21st blog I wrote. 2,200 new stores being opened this year, up slightly from the year before. Even if same store sales are now off slightly isn't the projectory still upwards? Their business model still seems to be working. Now this, part of a May 1st 2025 blog. A razor thin adjustments to profits. That's what makes figuring out what is going to happen next so difficult. Now a look at how McDonalds traded on Feb. 6th, 2025. This was the morning after it's quarterly earnings report. Now a look at something more extreme. Let's now go back to a different reality three years ago. The McDonald's story is constantly in a state of evolution. The following snippet might help you realize the power of these quarterly earning reports. Sometimes they are stonger than expected. August 6th will be the date their next earnings report comes out. Here now is how McDonald...

Trading Options The Day They Expire Using The Stock Moderna As An Example.

I don't really want to write a blog on this topic. Yet the concept of trading one day options is increasingly becoming somewhat controversial. People often have harsh words to say about it, kind of like the diversity of opinions people have when it comes to the topic of cryptocurrency trading. Either you're for it or against it and if you're against it you will probably never change your opinion. Such is life. I get that. If you have a couple of million dollars in your bank account you might find the adventure of trading Friday morning options which expire that day to be somewhat entertaining. It puts your brain to work. I have being watching and trading in one day options (or options scheduled to expire in the same day you bought them) for approximately forty five years. That still doesn't make me an expert. I like one day options on the stock "Ford" in particular. Stocks in the ten dollar range for example can sometimes move fifty cents in one day which then does wonders on the options premiums. Look at a blog I wrote only a few days ago showing the oveseas automobile company called "Vinfast" and how it exploded upwards in price in one day. I will show you it's chart that I just referenced. That's the kind of action I am talking about.
In the past I have used one day options in conjunction with speculating on which way the markets will move on the Friday opening. In this exercise I often time my exit point to be in the Friday morning premarkets. I pick the price I want without the luxury of knowing what the "bid" and "ask" are. This week I did a blog about catching mid-week reversals. That's another topic. The stock I used to explain how it might work was "Moderna". One of the reasons that I picked it because it has had a tough time as of late and the volumes of trading on it are recently increasing. That could be a good sign. Here is it's five day chart. Hone in on it's Friday morning rally.
So the question now is would you ever try to make money playing options on this stock on the day this series is set to expire? Now learn about this action. We know from the chart I showed above that "Moderna" jumped on the opening on Friday morning. Let's look at the Thursday's action in the 42 series of Calls. Here is how they closed the day on Thursday at 4:00 p.m.
Can you see they closed at $1.16 a contract? That means one hundred and sixteen dollars a contract. A series with a striking price of 42 locks in a purchasing price of $42.00 on one hundred shares of the Moderna stock. Let's pretend you bought one contract. "Moderna" jumped on Friday's opening. That means your going to get rich. Here is how rich your going to get. It's a look at the same option series at 10:02 a.m. on Friday morning, which is thirty two minutes into the trading action. Sell your position and say thank you. That's what this exercise is all about.>
Just get out, right? I remember watching this situation unfold and looking around on the internet for any news as to why it was up. I couldn't find any. Still with me? Let me now pull up a printout showing all of the action in the 42 series of Calls for the entire day. Here it is.
The Calls only went up to a high of $4.40 on the day so getting out at 10:02 a.m. time period would have given you the lions share of the upward move. Timing in this exercise is everything. On the other hand, getting into these Calls at 10:02 a.m. hoping to catch more of the upside move would have gotten you into trouble. Now this. What goes up what must come down? Right? Let me show you a daytrade that would have generated a tenfold payout in a relatively short period of time. Once again, it is "Moderna". First it's Friday's trading chart. We already know about the rally it had in the morning.
Can you see the stock topping out around 10:15 a.m.? Buying into either of these two Put series (or others) at that time would have got you the lowest price of the day.
In at 10:15 a.m. on Puts and out later on in the trading session at your leisure. These kinds of price swings happen. It's not for the faint of heart.

Comments

Popular posts from this blog

Living on Kraft Dinner?

A Fireside Chat - One Year Options and Thirty Day Options. Which is Better?

The Little Engine That Could