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Turn Around Situations On A Tuesday

First of all I don't really like playing one week options on stocks on a Tuesday. I would rather wait until Wednesday and look for a mid-week reset in the markets. That said, Walmart's one hour sell off on a Tuesday morning kind of tweaked my interest. Let's follow this together a see what happens. One observation. Look at the volume of trading in the lowest series of call, the 90 series. They are the ones to stand to gain the most in any mini-short-term uptick. Yet then again, maybe the stock will continue to go lower. Here is it's five day chart as of seventeen minutes earlier. Now the indexes. Now a few minutes later at 11:02 a.m. Now the same three series of Call options starting with the lowest striking priced options and the ones with the lowest trading volume. A bid of $1.01-$1.08 has now jumped to $1.22 to $1.29. Doing the math on the higher two series offers equally as impressive gains. Purchasing on contracts sizes of 10 or 20 could eke out small gai...
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Towards Understanding How Some Companies Have Their Option Series Set Up Differently.

Trying to understand what a company does is often a mindless exercise. Look at these company names. HubSpot, ServiceNow, Cloudflare, Dynatrace, Broadcom, Tradeweb Markets, Vertic and Quanta Sevices. The list of how many high tech out there is overwhelming and some of these stocks trade in the $600.00, $700.00 and $1,000 range! So when I do my little blogs tracking movements of like one dollar on Walmart that get me excited what world am I really playing in? Hold that thought. Some option traders like to play options on stocks where the striking prices and days to expiracy are structured in a different way. I now want to show you one example of what I am talking about. I will use the stock Interactive Brokers to show you how things are set up differently. There are countless other examples I could use.
Now it's last five days of trading. It's up five or ten dollars in two trading sessions.
Now there are two things I want to point out. First is a calendar list of when options on this stock expire. Unlike other other stocks like Walmart it's not on a weekly schedule.
The near term options expire every thirty days and the longer term options are set even further apart. With the example of Walmart I have used before the prices of it's Calls and Puts with a day or two until expiracy can be somewhat erratic which makes them a delight for option traders. With one and two month out options not so much so. Then there is a difference in how striking prices are set up. Here is an example of what I am talking about.
Spreads that are five dollars apart. With this kind of a market setup a fifty cent move during a morning trading session is going to do next to nothing in moving the "bid" and "ask" on a Call or Put option. Moves this small will barely move the needle. The point is that these types of options are better designed for traders who want to check in on their option positions every couple of days or even weeks and not every couple of hours. It's a different approach to option trading. In some ways it can be even more discouraging if your position slides offside. Here is a look at two Call option positions on Interactive Brokers. They both have two weeks of trading life in them.
Now here is the daily trading activity on it last Friday which corresponds to these two option series. Can you see the morning swing of $4.00?
Now for a statement that might contradict an above comments I have made. Yes these options have price swings which can be day traded and yes the liquidity in these options are decent. Note the ninety cent spread on the "in-the-money" series of options and a forty cent spread on the "out-of-money" spread. That's reasonable. In some way these longer term options are "big boy" trades where option traders are rewarded for catching five or ten day trends. All of these leads us to a discussion of something in option trading called "leaps". These are even longer term option trades. Options like a year or two out. That's a dicussion for another day.
In future blogs I will look at the leverage that these longer term options provide. ***** Read my blog (see one of my December 2023 blogs) entitled " A Fireside Chat. One Year Options or 30 Day Options. Which Is Better?" Back then I was talking about the same thing, showing Disney as an example.
The 95 series of Disney Call we were talking about in December of 2023 would have paid off nicely by March of 2024.

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