Featured

Costco. It's Short Term Options

 Options on stocks in the $1,000  range often move  50%  or more in only a matter of  minutes on the opening on Wednesday and Thursday's . The trick is to  anticipate correctly which way the markets are going to move. That's a fools game you might say? Yes and no. It may not be a game you ever play but it might be something to consider to put in your bag of tricks when you are on a role. One thousand dollar stocks sometimes move five, ten or fifteen dollars on the day. If you have profits it's best to take them quickly. Costco is a prime example of that. Let's look at this mornings action. First it's five day and one day charts. Tuesday's trading was kind of choppy. Might it drop on the opening tomorrow? Here is a look at where the 1,035 series of Puts closed that expire this Friday. They closed at $8.50. It looks like Costco cycled up about five times yesterday. Given a weak market opening doesn't it stand to reason a three or four or five dollar will be i...
Post a Comment

"Boeing" Jumping Ten Dollars In One Day and How I Ended Up Picking Up The Crumbs

On Thursday June 27th 2021 "Boeing" jumped up in the morning like ten dollars a share and went on to close out the trading session on a strong note. It's not that unusual to see airline stocks jump like this, or "Telsa" or many other stocks priced over $200.00. Stocks like "McDonalds" and "Disney" which cost less by comparison often go up by half of this amount. It's often near impossible to seach out as to why moves like this happen. In this instance, one of the reasons could have being because a Judge imposed a less severe than expected fine on "Boeing" for past issues and another reason was the release of rehashed news about new plane orders. Often times the real issue is trying to determine how fresh all of this news really is. If your an option player what then do you do when you see price swings like this? Jump in on the upside and hope that this upside wave continues, stay away from it altogether or try to play the downside? If you decide to purchase the next day "Calls" or "Puts" that expire in one day is there a 50:50 chance of winning?. Or are the olds more like a 60% or 70% that you will lose, given the stock might then decide to do nothing? In this particular instance here is some additional news I found. Boeing can move up or down for many reasons.
What now is the above chart we are looking at? Well it's "Boeing's" five day chart and one of the things it shows you is how it dropped in price on Friday' after it's upward spike the day before. Is that what you expected might happen and would you have had the nerve to purchase "Put" options on it on Thursday just before the close? Stop, I messed. I forgot to build in the excitement of what happened on Thursday morning. Look at how "Boeing" shot up too by 10:00 a.m. and look at where the 252.50 "Calls" were trading at. If the stock is up ten dollars in the first thirty minutes or so of trading why wouldn't it go up even more in price in the next hour or so? Would you have being tempted to purchase the 252.50 series of "Call" options at this particular period of time? They were out-of-the money Calls and it looked like the stock was about to go to the moon.
They were bid 1.82 ask and offered at 1.98 with a high that morning of 2.44 . Look also at how they were traded at a price of only sixteen dollars a contract closer to the opening bell. Someone could have make a nice return on this series of Calls but then again who would be bold enough to be purchasing "Calls" with a striking price ten dollars "out-of-the-money" with only one days trading life to go? So here is what I did. On the Thursday afternoon I decided to play the downside. At 1:42 p.m. I purchased one "Put" option, the 250 series of "Puts" expiring the next day at a price of$2.00 or two hundred dollars. Then at 1:57 p.m. as "Boeing" moved up slightly I purchased a second contract at $1.68 and then one more again at 1:59 p.m. for 1.69. Now I was into this position at somewhere north of $500.00 U.S. which was the top level of my comfort zone. If I lost it all I wouldn't be in the mood to buy a new tennis racket or new running shoes over the weekend. What happened next? I had to wait for Friday morning to find out.
The premarket bid and ask shown above shows a bid $246.79, ask $246.97. That was great news. Remember how in a recent blog I talked about premarket trading. What I did was place a premarket ticket in to sell one contract "at market". That's about the only way to trade in the premarkets and hope that they will be fair in the price that they give you. I got a fill at $3.65 and it was reported to me on the opening at 9:30 a.m.
I then hung in for ten minutes after the market opened and sold off the other two remaining contracts at $2.92 each. I just wanted to be out and my profits locked in. What would have happened if I stayed in longer. Here is a look at how this series of "Puts" ended up trading on the day.
They did hit 4.70. Did I buy a new tennis racket or running shoes? No.

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