Featured

The Sliding Door Syndrome - Hertz

 Open the door and guess what might happen? Who knows which way the winds will be blowing. The used auto car market got dumped on last week in the U.S, especially on tariffs new.  Trump said he might raise the tariffs on cars to more than 25%. It's a fickled  market. Here are a few of the sell offs. 1) Carvana Company. It sold off over $21.00 dollars on the day last Friday. They have a reputation for having share manipulations with a long history of  insider "buying-and selling-activities". They have a short interest of 5.3% . It didn't help much that the DJIA was down over 700 points on Friday. 2} Carmax also sold off on the week. They have an earnings report coming out and that could cause the stock to drop but maybe not. It could actually rally. Here is it's one week chart and a conference call dial in number. Listen to it if you like. I might be. Now here is a look at the 65 series of Calls on this stock that expire this coming Friday.  On Friday morning at ...
Post a Comment

Eli Lilly Calls With Four Days to Go.

This is a four day trading week starting with Tuesday. Monday was a holiday. Here is how the stock Eli Lilly traded on the last five days and in the last three months.
The stock is surging upwards (thanks to a new weight loss product) and the following Calls and Puts are very expensive. Here are Fridays closing prices on the 780 series Calls and Puts. First the Calls.The Calls cost $14.35 and the Puts cost $11.70. They only buy you four days of trading time.
Now here is a chart showing how the stock closed out the day.
Finally, here is how the 780 Calls and Puts closed the day.
So the stock lost $24.60 on the day. Note the" Open- Interest" on the Calls and Puts stayed the same from the previous day. What happened was "covered-Call-selling" in the morning, meaning as the stock tumbled it was a no brainer to be selling the Calls if you already owned the underlying stock and then buying them back at a profit later in the day. There was also some just outright "Put-buying" activities triggered in part by how quickly things were crumbling down in the late morning, also with the intentions of getting out before the end of the day. That's why the numbers of open interest activities ended up matching perfectly from the previous day. Most of this would be "programmed-buying" triggered in part by a general sell off of the markets in their entirety. What proof do I have that this is what went down? Well look at this early morning action.
Well 139 Put options where opened by 9:41 a.m. followed by
a volume of 157 Puts at 9:47 a.m. What this means is that in the first 17 minutes of trading,traders were nibling gingerly at this action. After that another 1442 contracts traded on the day or 721 "in-and-out" Puts transactions. It took the first fifteen minutes of trading to prove that a general freefall in the markets was about to happen. Telsa was down $6.19 on the day, Caterpillar was down $8.17 and Snowflake down $10.23. It was just one of those days were the high flyers got picked on. The small "retail players" didn't catch any of this action because at the start of the day both the Puts and the Calls were simply to expensive to play. "Covered Call writing" is a strategy that the "little sharks" can't afford to do.

Comments

Post a Comment

Popular posts from this blog

Living on Kraft Dinner?

Image
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 ...
Read more

The Little Engine That Could

Image
Walmart again. It's all I seem to blog about. Here is it's five day chart. The stock keeps going up and the option series are set up in one dollar spreads. Even a fifty cent move on the stock moves the needle on these Calls. Look at how this series of Calls was trading yesterday at 3:00 p.m.. Now here is this same series of Calls just before noon today. Thirty days of upward action like this punctuated by the off day of decline. Now notice the higher volume of trading in the series of Calls with the higher striking price. These are the ones's with more leverage. At the same time look at the five day chart on Costco. The two stocks sometimes trade in tandem. Humpty dumpty sat on a wall .... a had a great fall. Someday soon a fall might happen but what a great ride it has been.
Read more

A Fireside Chat - One Year Options and Thirty Day Options. Which is Better?

Image
Some say to think small, not big. Trying to play Disney options is thinking big. It is a stock slighty out of favor. If we start with it's a three year chart, we will see it is down by about 50% over that period of time. Now it's one year chart. If the stock can break 110 in early 2024 the sky is the limit. It does have a lot of moving parts so anything could happen. Look at these Calls options one year out. One year in options buys a lot of time.They look reasonable. If the stock ever inched up to the $105.00 price level in the three or four months these options would jump up in price by about 50%. Even more if they had really good news. Yet it's the "what-if" aspect of the equation that castes such a trade in doubt. "What if" stories just don't cut it. There are to many variables in play. Then again, why are we even thinking of long-term Call options after a December's rally? Let's switch gears. If consumers are out spending for X-mas...
Read more