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CarMax Puts?

 Here is the number. Call in to listen to their just released quarterly report. You won't have to talk to anyone. It is 800-839-1247. In about five days this link will disappear. Please listen to it. I listened to all of it once and to the first half of it two times. What I learned is that their retail car sales on the quarter compared to the same quarter a year were up 6%. They purchased 336.000 vehicles from the public, up 7% and 48.000 from dealers up 38%. Their average retail sale price was $26,100, down $400.00 per vehicle from last year. They doubled their share buy back program. AI technologies are now helping them operate more efficiently. Everything seems positive. But wait, we are talking about  the used car business and what could happen if consumer confidence suddenly starts to wain? Look at it's three year chart. It now sees to be hitting a rough patch.  Now a one month chart.  All of this talk about tariffs and what level of tariffs will be imposed on n...
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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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