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Tesla - One Day Options. Not Your Typical Read

This blog is going to be a tough read because it tries to track Tesla's early morning option trading in the last day of trading in the October 18th 220 series of Tesla Calls. Critics of "one day" options are having a hayday in pointing out these "one-day-to expiring" options are a mockery to concept of sound financial investing. Here is Tesla's premarket trading price in the 220 series of Calls at 9:29 a.m. on Friday Oct. 18th. They are flat. Remember last Friday was an exceptional day for the Tesla stock with it being hit with a $21.14 drop on the day. Do today's traders remember this? Probably not. Why should they? It's a given this stock can be volatile. Option traders playing the downside last Friday on Telsa made out like bandits. Now it's 9:31 a.m.reading. Up only eleven cents. Option traders are in a period of time where they have to deal with early morning trading jitters. Is there a glimmer of hope that this stock might bounce up one
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Jan 5th Playing Deere and Company and Ford

So John Deere was up sharply this morning and when I checked the news about it I read about Deere at a Vegas trade show and driverless tracters. Who wants to go to trade shows during Covid and Caterpillar is busy working on driverless machinery to put in underground mines? To me it wasn't much of an event. Everyone already knows the driverless tractor story. If you own a piece of equipment that costs like $600,000 wouldn't you feel more comfortable putting a driver in it?
Now look at how the stock traded the previous day and look at where the stock was at this morning. It was up thirty dollars in only two days and the Call options were up a generous amount of money
Ok, as a small time trader wanting to catch some of this action what do you do? Well you could purchase a Put with a striking price over five dollars "out-of-the-money". If the market starts to top out it is inevitable it will give up some of these gains. At 9:53 a.m. after getting out of Ford Puts at good timing (see the one day Ford chart further below) I made this purchase. The above chart shows my timing of this trade. Notice how wide apart the Bid and Ask where. Bid 1.65 Ask 2.33. That's crazy. Option makers get nervous a times like this as no one knows when a stock this powerful is going to stop going up. At 11:15 a.m., twenty minutes later the position was only going slightly against me. The Bid was then 1.35 and the Ask 2.34. That's almost a one dollar spread making it next to impossible to trade out of.
Much to my disliking the stock continued to rise. It went another three dollars upwards after I bought in. I admit fighting a strong stock is a challenge and I know that jumping into a position like this is better to do sometime in the second hour of trading and not the first. That noted I might apply that logic to future trades. Or will I? Instincts are tough to temper.
At 11:46.00 a.m., thirty minutes later the stock sold off $1.50 however the Puts only nudged up slightly. I knew anything could still happen. .
I bailed out at 11:47 a.m. at $2.47 after almost a two hour hold so I made aproximately $30.00 an hour by risking about $200.00. The real drop in the markets happened after 2:00 p.m. in the afternoon. The closing Bid and Ask on this series of Puts at the ended up at Bid $4.70- Ask $6:00 so had I held in I would have made some more serious money. Deere and Company offers endless trading opportunities but the real trick is to learn how to say with it as the day progresses. The DJI dropped 372 points on the day and here is what the one day chart on Deere and Company ended up looking like. (My skill set is more atune to making ten or fifteen minute trades on options on stocks like Ford, not the sleeping giants like Deere and Company). It is sometimes interesting to critique how you trade.
Are you able to see how the chart looked at 11:47 a.m.? It looked like it wanted to go back up. Now that I was out it was still before noon. I decided to go back to Ford Puts. Here is a five day chart and a one day chart. Look at when I got in and out.
I got in at 12:03 p.m. and out at 2:48 p.m.. I missed the real downside action at the very end of the day. They ended as you can see closing the day at $1.00 per contract. What amazing moves in one day. Is all of this a fools game? Yes and no. Some people like to spend their time doing crossword puzzles. Everyone is different. That's what helps to make life interesting.

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