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Day Trading One Month Out Options. Learning To Skim The Tiniest Of Moves

This blog is different. It's about skimming small profits on one type of option in particular. It's also my story about how to make the time value of "one-month-out" options your very best friend. What I am about to try to describe to you is a phenomenon of wrongly calculated time values built into option pricings. Wrongly calculated from the perspective that some option prices (their "bids and asks") are over-sensitive to the tiniest of pricing swings. Who am I to make claims like this? What credentials do I bring to the table? I don't want to tell you as I want to keep my identity a secret. Let's just say that I have being trading options for a long time. Over the years I have learned that "nine month" or "one year out" Call options or Put options on stock's in the ten dollar price range are often mispriced. As example, I have followed the stock "Ford" for like forty years and to me it's January Call options a...
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Buying A Stock After a Material Change of Events

Please listen to this logic. The week before last Krispy Kreme jumped on the Friday and ended up $2.76 on the week. The news was that the donut chain will begin to sell its products in most of the country's 14,000 U.S. McDonald's locations, requiring up to 30 new backeries to boost output.
Here is a look at it's ninety day chart.
Now here is a chart of how it traded last week.
With so many things to watch of higher quality I am not a fan of following this stock. My point however is to add stocks like this to your radar screens after major events like this. Why? Well the odds become greater of a second wave of buying kicking in. Look at the volume that poured into next weeks 15 series of Call options on Friday.
On Thursday they were trading for considerably less and notice that these were positions opened and not then sold out on the same day. Once again my point is not to be afraid of chasing action like this and it makes sense that it would pop again on a Friday. The decimation of good news is afterall a process of a delayed reaction. A Monday morning 11:02 a.m. look at the same story.
To be continued.

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