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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.
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Having The Guts To Pick Your Battle Using Options On "Uber" As A Trading Vehicle. A Good Read.

So you want to learn how to play options. Let me pick a stock. The stock I will pick is "Uber". Why? Well it has options on it that trade in one dollar incriments. Stocks that have options on them that trade in one dollar increments are easier to play than options on stocks that trade with $2.50 increments. Stocks like Tesla and Caterpillar have the options on them with the $2.50 spreads. The one dollar spread options are easier from the sense that any small shift in a stocks price will move the needle on the value of the underlying option. Now here is Uber's one month chart.
Now it's five day chart.
The stock was down $4.72 on the week but had a strong day on Friday when the DJIA was up 674 points on the day. If we want to play it up here is an example of one option series we could play.
It's a Call option that expires in two weeks time and the striking price is seventy two dollars. Look at the price it last sold for. It last sold at $2.10. What does that mean? It means to buy one of these contracts will cost you $210.00 U.S. plus an opening commission of about $10.00. What does that option get you? It gets you the right to lock in the buying price of $72.00 on one hundred shares of this stock up until Friday afternoon two weeks down the road. Well you don't actually have to buy the stock, you can just sell out your option position. Let me give you two examples of how this might work. Let's say the stock closes at $72.00 two weeks down the road. If that were to happen your Call option you are holding would expire worthless and you would lose all your money. You would not have to do anything, it would just expire. Let's say the stock closes at $73.00 dollars. That would mean you are $1.00 "in the-money" so you could sell your option contract for $1.00 or an amount of $100.00 minus a commission. You would net $100.00 minus the second commission of $10.00. Not much fun, right? Now let's say Uber decides to move back up to $80.00 where in was trading less than one month ago. Guess what? The option position you are holding would jump to at least $800.00. That's the 80 minus 72 difference. Uber's next earnings report comes out May 6th and it beat analysis expections in the last three quarters. Let's follow this and see what happens. After Friday's rally the market might just want to catch it's breath. Maybe you can get in for a bit less. I am not saying do this trade. I am saying that if you are new at this game this example might help you to get a feel for what to expect. Yes the markets are crazy right now. Let's see what happens with this one. There is more to this story.
Now this.
It's fourteen minutes into the Monday morning trading session.
This the reason I like options on stocks that have one dollar spreads. Now an afternoon look at the same thing.
If your happy with your profit just say thank you. This was a play on a stock closing strong on a Friday afternoon and having the strenght to move upward on a Monday morning. Is the steam is now out of this one? I will comment on what happens to this series of Calls next week. Here is a next Wednesday's look.
What a fight to get back up to this level.
Two week options are a totally different experience than one week options.

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