Featured

McDonalds Again And A Follow Up To Yesterday's Blog..

Option traders on Friday mornings just want to be in and out in the first hour or so of trading on short term options. In the second half of the day most of the action calms down. McDonalds sold off a little bit yesterday afternoon and firmed up a bit towards the closing. Could this "mostly downward trend" continue? Here is a partial look at some of the opening bell's activity. Today is a Friday however let us first look at how the stock traded yesterday. Now a look at it's trading pattern at 9:32.22 a.m. The McDonald stock jumped up $4.98 and the 317.50 Puts we followed all day yesterday which are now "out-of-the-money" acted accordingly. They shrunk in value. During the fist 2.22 minutes of trading they traded down to 34 dollars a contract. Now this. In the first three minutes of trading the stock jumped a bit and then started to come off a touch. These Call options where not attacting all that much attention. The bid and ask jumped up on no volume. ...
Post a Comment

Slice and Dice Caterpillar and Tesla Options On A Friday Morning at 11:59 A.M. , During A Downward Moving Week.

This blog is about short term option trading on options which expire in less than one day. A proposterous proposition one might say. I agree, however if you are serious about learning how option trading works the following scenarios of what I am about present are all quite revlevant. Let me begin with the observation that there is next to no trading in Caterpillar Puts or Calls of these two series of slightly "in-the-money" or near to being "in-the-money" options as illustrated below. One of the things that this tells us is that there is no inside news of anything "in-the-pipelines" which might cause this stock to move up or down during the remainder of the afternoon trading session. Caterpillar as often mentioned before in previous postings is not big on making news releases. In contrast, Boeing activities seems to create some sort of news or a reaction almost every other day. Here is what the markets are doing as of 11:36 a.m. which is Friday April 12th.
Shown above is the 11:59 a.m.chart on Caterpillar. What's going to happen in the next four hours of trading? Look at how these Calls and Puts are positioned.
For interest only compare this activity to what is happening with these two series of Telsa one day left to go options just a few minutes earlier. Look at the staggering number of Call and Put options traded.
To be fair, nobody in their right minds would be trying to play any of this action. Or would they? What's going to make the indexes start to turn around? Overall it was a down week with inflationary fears in the air. Now let's look at the five day charts on both of these stocks. Both charts are ugly.
Now the end of day readings. The D.J.I. index keep falling.
In both cases the Puts went up in value and could have being profitable trades. Looking for end of the week rebound in a downward moving market is generally not a good idea. Jumping into the market at noon on a Friday when the D.J.I. is down 307 points looking for more downside action over the next few hours is something to consider. Looking at the closing charts at the end of the day very much supports those kinds of thinkings.

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