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Caravan On A Monday Opening Rally

Let's start with the action on Carvana back at the start of the week. Here is it's mid afternoon chart on Monday. The stock is up $23.00 on the day! When you see stocks move up like this you sometimes wonder why there isn't more profit taking at the end of the trading session. . Now let's jump forward to Wednesday afternoon with tomorrow being a holiday. Carvana is up. How much? Well about $28.00 more dollars in the last three days! Word on the street is that their main competitor "Carmax" is in trouble. Here it how it has traded in the last thirty days. It had a bit of a dip but seems to be coming back. Avis Budget Group also shown below the same thing. Hertz in the last three months has also struggled. So back now to Carvana. It's on fire this week. Buying Puts now that expire on Friday would be kind of dumb. Yet then again the stock could swing $20.00 or more in a few hours! It's a bet on catching the right directon. Now here is a wildcard fact...
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A Follow Up To A Recent Blog I Did About Playing Two Week Options

Let's begin by saying I am not a big fan of buying "two-week-out" options. Yes they cost a touch more than "one-week-out" options however that is not the reason why. I like thirty day out options and one year out options and Monday, Wednesday and Friday "one- day-options" better. So what's the matter with "two-week-out" options? Here is my answer. Back on January 6th we looked at the Interactive Brokers Group 180 series of Calls that expire on January 17th. At that time they were trading at $4.90 a contract. Here is a look at that printout I posted.
Now this, a Friday January 10th printout. The DJIA closed down over six hundred points on the day.
So here we are at the end of the week and we have for lack of a better word, wasted four days or almost half the life of these options. But wait. Can you see how they where down 47.66% on the day? That means on the previous closing session they were trading at $6.25 per contract. (It's a brokerage company so it's obvious it's going to drop on a day the market has a big sell off). Now a look at it's five day chart.
Imagine buying Puts on it on the morning rally on Tuesday morning and getting out at a huge profit minutes later at about 10:30 a.m. If you follow the charts wouldn't you recognize that could happen? If you answer yes then why do you need to clutter up your mind with "two-week-out" options. I say this because I feel more secure playing five, three or one day options than I do playing "two-week-out-options". Yet that's only me. ** Yes there was a decent profit to be had on the "two-week-out" options preceding Fridays precipice slide but that's another part on the "two-week-out" option holding syndrome. The urgency to take profits isn't there compared to playing shorter term options. ** How did these 185 Calls end up trading on January 17th?
Bottom line. The options on this stock are more interesting than most.

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