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Why Tuesdays Around 11:30 A.M . Are Particularly Unattractive Times To Be Looking At Options That Expire On Friday

So here are nine examples of what the heading is alluding too. Bad times for the most part to be entering into option positions. 1) Tesla. 2) 3) 4) 5) 6) 7) 9) 8) Now the closing reading on these Calls at the end of the trading session. $6.20 is down from $8.03 on Tesla and on First Solar the Calls are $3.10 down from $3.35. Here is what the markets did on the day. So let's continue on. Now Elli Lilly and Caterpillar. Elli Lilly went from $13.40 to $15.65 and Caterpillar went from $3.95 to bid $3.95 and $4.35. Now Biogen. It went from $2.50. down to $1.45. Boeing Calls went from $2.88 to $3.70. In Biogen there were no further option trades on the day with the bid and ask going up towards the closing bell. Walmart couldn't do anything as the effect of this tariff situation is all new. When is food going to cost more? It's Calls went from $.88 dollars to $.75 dollars. Now the last one, Home Depot. $3.80 went to $4.30 So really the markets sold of or went side...
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The Essence of Short Term Trading. Telsa and Caterpillar

First, let me point out that the stock Telsa was the most actively traded stock on the Nasdaq for the week by both dollar volume and by share volume. It attracted a lot of attention. So did the Call and Put options trading on it. Let me show you something, a printout of one series of Call options on Telsa at 3:03 p.m. on Thursday afternoon. The Telsa 190 Calls which were set to expire on it the next day. Talk about action.
Note that going into the final hour of trading 152,000 contracts had traded on this series of Calls. It's a crazy high number. It would seem as if traders where hoping for a rebound. A rebound from selling off like twelve dollars in one day! Why you might ask did it sell off $12.00 in one day? I wasn't following the action all that closely however what I was learning is that Musk held a conference call the day before and listeners where somewhat disappointed with his plans on moving forward. There is always news on Telsa. That's why it's options have such a following. Wouldn't people very quickly forget this news? There is afterall always news on Telsa. Now for a comment which some readers will not understand but does not really have that much significance. It's about open interest numbers. The open interest number at the start of this day was only 5,242 contracts. That's reasonable. Afterall, holding "in-the-money" Call contracts on Tesla with two days to go is not generally a good strategy.The 152,000 number on the screen above seems near impossible. So what did I do when I saw all of this action? Here is what I did.
At 12:29 p.m. against my better judgement I bought one Call at $3:10. Usually on Thursdays if I decide I like something I wait until 3:59:56 p.m. and buy in then "at market". I ended up second guessing myself on what I had just done. With that many contracts outstanding wouldn't there be a conspiracy of some sort to hold the stock's price down going into the following day? Burn as many Call holders as possible? Now look at this chart. Telsa went sideways all Thursday afternoon. I got stuck watching it. That was no fun.
So whats next. On Friday morning in the premarkets I saw Telsa was up and I wanted out. I picked a price I wanted. The ticket was reported as filled at 9:30.07 a.m. (the markets opened a 9:30 a.m.). I was happpy to be out. Here is the ticket. Out at $540.00.
How did Telsa end up closing the day? Look at this.
Something now puzzles me. Look at what the stated open interest was at the start of the day. Only 15,459 contracts. What was yesterday's reading of 152,000 open contracts all about? Where they all short seller's buying back covered Calls they had sold? Can someone help me with this? Part two of this blog is about a Caterpillar Call experience I had on Friday morning. I will make it quick. Here is the "in-and-out" trade I did. It was on the 250 series of Calls which expired that afternoon. Sometimes the action in Friday Calls which expire that day are over by noon. In at $.99 on two contracts and out thirty two minutes later at $140.00. Call me chicken. I got tired of waiting.
Here is a one day chart on Caterpillar and here is how this series of Calls ended up trading the day. I did perfectly in identifying the low of the day just after 10:00 a.m. in the morning but not so good in picking the top of the day.
Life goes on. Friday option trading can be exhausting.

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