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Living on Kraft Dinner?

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 ...
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Attention Spans and Retention Abilities

What's your attention span for reading these blogs? Most readers will decide in two or three seconds if they want to read this blog. If this blog was called "Boeing Calls" for example red flags would instantenously be raised. Most readers would have a longer attention span for blogs called Disney Calls, Mcdonald Calls or U.S. Steel Calls. Why? Well casual relationship are easilier to understand. Disney must be hurting with the covid thing, Mcdonalds still has their their drivethrough business and U.S. Steel might benefit when it gets through this rough patch of poor auto sales. People are attracted to things that might go up or down for logical reasons. If your still reading this blog I congratuate you. Many readers would have clicked off by now looking for more instant gratifications. Most option players shy away from playing Boeing Calls knowing that there are an infinite number of variables that can send it shooting up and down. I get that. I like playing options on Friday, option contracts that expire that day. Last Friday morning I bought Mcdonald Puts and was up 300% on my money in 25 minutes only to then watch it melt away and expire worthless. My point is that Friday swings can be extremely rewarding. Boeing opened lower this morning causing a selloff in the 192.50 Calls.
Look at what the 192.50 Calls traded down to. They went down to 20 cents or twenty dollars a contract. Then the stock rebounded over four dollars a share in thirty minutes!
At 9:59 a.m. they were bid .39 - ask .44 having hit a low of .20 just seconds below when the stock seemed to be in a freefall. The four dollar stock increase was magical. Look at what they were trading at by 11:12 a.m. In thirteen minutes they more than tripled in price and look at how the volume of trading went up more than 400%.
As an option trader I like to be out of my positions by noon on Fridays. It's just something I do. Here now is it's closing readings for the day showing how high these options traded up to at one point in the day and where they ended up closing. They went as high as $2.53 a contract.
Yes it would hve taken guts to buy into this one on the morning dip. Yet some Friday option players know that the day is still early in the first hour of trading. Nearly anything can happen.

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