Featured

Waste Management Again

Last Friday I did a blog on Waste Managemnet showing how it closed strong on the day. I showed how it's Call options also got dragged up and my point was that two week out options are sometimes a sweet spot in the market. Here was it's one day trading chart on Friday. So this morning, a Monday morning I checked it out once again. Here is how it was trading. Now let's skip ahead to the end of the day. Here is how the same Calls are trading. So in two trading sessions they went from a low of $3.43 up to $5.60 with no thoughts about "time-value" working against you. Here now is it's five day chart. Option trading doesn't always have to be about making "all or nothing" trades. *** Earnings came out. This is a good example of pre-earning option trading.
Post a Comment

Charts Don't Usually Do This So Quickly. FedEx

Look at this chart - it was early into a Friday morning. I am sorry I ignored it.
It was Fed Ex and I was too busy to be watching it. My first thought when I saw the drop was that here is a perfect example of how a stock can drop and then be held perfectly still at a lower level. I often see this kind of a chart formation and know that it is often a precursor to further price declines. Yet I overlooked something. It's Fed Ex and this stock has a history of over amplify bad news and then somehow discounting that news.
......
The chart above shows its one year trading history. It's a power house business which has a history of getting knocked down. Now this.
Can you see how some traders were not afraid to buy in on bad news? In this case there was time after it crashed to get in on the buy side. Now a look at next weeks Calls to see the slightly different trading action.
NOW LOOK AT THIS. THIS IS SOMETHING SUPER IMPORTANT. Look at the open interest now in these next week Call option. OPTION TRADERS ARE SMART. THEY KNOW HOW TO PLAY THE GAME. Pick your battle and run. There are now only eight open contracts on this series of Calls! Yes eight. The consensus now is that this particular option series is now to risky to hold onto. (I will check back in a few days to show yu how they are doing). The end.

Comments

Post a Comment

Popular posts from this blog

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

The Little Engine That Could

Image
Walmart again. It's all I seem to blog about. Here is it's five day chart. The stock keeps going up and the option series are set up in one dollar spreads. Even a fifty cent move on the stock moves the needle on these Calls. Look at how this series of Calls was trading yesterday at 3:00 p.m.. Now here is this same series of Calls just before noon today. Thirty days of upward action like this punctuated by the off day of decline. Now notice the higher volume of trading in the series of Calls with the higher striking price. These are the ones's with more leverage. At the same time look at the five day chart on Costco. The two stocks sometimes trade in tandem. Humpty dumpty sat on a wall .... a had a great fall. Someday soon a fall might happen but what a great ride it has been.
Read more

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