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The Trap On Costco With One Day To Go "Call" Options

Let's start by saying it's 3:00 p.m. on Thursday and I am going to talk about the big sell off that Costco experienced this morning on news that seemed to take some time to be disceminated. It turned out to be regular stuff kind of news on the subject matter of last month's food sales. In the early few minutes of trading the average retail trader had no knowledge of what this news was all about. Opening markets started falling quickly. That sometimes happens. Let's move forward to 3:03 p.m.. Costco is way down in price $28.00. That's a big chunk. Might it's Call options rebound tomorrow? I don't usually find these "looking-for-a-rebound" situations to be very profitable. Might there be a second wave of opening selling pressure on the opening tomorrow?. That's the worry. Now there is more to the story that option traders might want to hear. It has to do with what happened this morning. Costco had a great fall. Look at this morning chart. It l...
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Ford Puts - sometimes they will surprise!

Back to an old friend. This blog is about why trading stock options on the stock "Ford Motors" can suprise. It's also about trading options I call "penny like options". In this instance I am trading options priced at twelve cents. For first time readers that really means $12.00. Now, a one day and five day chart on Ford. Can you see how volatile the stock is as of late?
Now the five day.
Now a look at it's trading in the morning today up until 11:30 a.m..
Now here is my trading experience on the day.
20 contracts in at 10:05 a.m. at $12.00 each and out at 10:38 a.m. for $18.00 each. That's six dollars profit a contract. It all happened very quickly. Are you able to look at the chart above and see how the chart dipped during that period of time? If you don't play options and want to don't start by making trades like this. Well then again some traders only only make trades like this. It's not uncommon to see a $300.00 trade quicky go to $3,000. It's Ford. Times are changing and Ford feels it most. This leads to yet another point. Being a trader is not everyones cup of tea. Ford options are just something that most people would not want to be thinking about. Pity. ***** Yet another example. This time on a Thursday with one hour and eight minutes to go in the trading session. Take a minute and try to figure out what is happening.
Ford is up .12 cents on the day. Think of what would happen if it ever gave up this gain by the end of the day or on tomorrow's opening. Welcome to trading Ford options. *** Here they are seven minutes into the Friday morning trading session. Yes there was a profit to be made.

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