The Dow Up 457 And the Nasdaq Up 460.70

Look at these gains today. Today is a Thursday. Meta is up $18.04, AMD is up $17.49, NVDA is up 110.55, AMZN is up $6.00, ELI lILLY is up 23.75, SUPER MICRO is up $241.52, NETFLIX is up $15.12, COSTCO is up $11.38 AND MODERNA is up $11.85. Gains of $110.55 and $241.52 in one day on two stocks! What's that all about? Well warning bells should be going off. We must be at a short term top. Three stocks stand out to me that are having changing stories. 1) Moderna. 2) Rivian. 3) Lucid In these crazy markets a lot of these stories get buried. Option players in these markets are getting whipsawed and it is getting to be to difficult a market to play in. Once this final round of earning reports are over things should get back to normal.

Towards Understanding the Bids and Asks and a Look at Friday Morning Reversals on An Option That Expired That Day.

Trying to get a fill can sometimes be an exacerbating experience. On Thursday of last week I wanted out of a Caterpillar 175 Call and had to cancell and wait and resubmite my ticket three times. Why? Whenever my sell ticket would pop up halfway between the bid and ask they would bump down their bid. Cancel my ticket and the bid would move up again. Now take a look a this quote. This time it's of Caterpillar last Friday thirty nine minutes into the trading session.The stock was clearly dropping.
At 10:09 a.m. Caterpillar was going down in price after a slight morning uptick. Look at how wide apart the "Bid" and "Ask" where on the Caterpillar 180 Puts. If you want to buy in and place an order of lets say $1.40 what do you think will happen? Watch the bid jump to $1.40 and the ask to $1.65. If you let it sit for a couple of minutes and nothing happens you might decide to cancell your order. What typically then happens is that the bid and ask will drop down again, perhaps to bid $1.20 ask $1.49. It then becomes a bit of a game of cat and mouse. The net effect is that the house wins. Why? Well these are Puts and if the stock starts to drop in price then you are shut out of the action. By keeping you out of the action your not catching a strong directional move. Now look at what happened. In this instance, these Puts in the $151 range ended up trading as high as $239.
Here now is it's one day chart.
Lets now go from the 10:09 a.m. printout to the 4:00 p.m. printout.
Once again. the high on these Puta was $2.39 which doesn't leave much profit if you bought in at $1.51 range on small quantities. The name of the game would be to buy in during the first five minutes or so of trading before it's reversal downwards actually started to happen. These options traded down to a low of $.43. You can see all of this better if you look at it's five day chart as shown below.
It closed Thursday at 183.14 and jumped slightly in the first few minutes of trading to 184.33. That's when you would have had to jump into the Puts for like $.50 a contract to triple your money in the first hour of trading. Yet then again, that's what last day option trading is all about. Who would be brave enough to be purchasing the 180 Puts that expire that same day on a stock heading up to the $184.00 price range? Some people would, knowing that Caterpillar had dropped on the previous opening to under $175. Friday mornings are the best time of the week to catch this type of action. You have to be glued to your seat if you want to attempt this type of trading.


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