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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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Caterpillar and Deere Having A Good Week.

First Caterpillar going into Friday August 16th, a five day chart.
Now Deere.
Imagine having options and catching one of these moves? Tesla and Boeing were also on fire this week. There was talk of unemployment numbers not meaning to much and talk of interest rate declines. Get in and get out when the times are good. The markets can change on a dime. I talked this week about Telsa Calls and said to get out prematurely and the same with Boeing Calls. But wait, there will always be more trading opportunities. That plus the markets did nothing on Friday after this monstrous run. There was no point in wasting your time watching your lists of favorite stocks after everything rallied so strongly on Monday to Thursday. Now the five day and one day chart on Deere.
Who would be buying Deere stock on Friday after it had a massive rally the previous day? I don't know. Now look at how these three series of Puts traded on Friday. The only reason I am showing them is to point out how option traders were smart enough to stay away from them. You would think that after such a big rally on the week more option players would have jumped in on the Thursday's close to purchase "near-to-the money" Puts, looking for a five or seven dollar selloff. Apparently not. Yet the stock did sputter on Friday's opening which would have presented an opportunity to squeak out a small but profitable Put trade.
Learning where and when to pick your battles is a big part option trading. ( The S&P500 index gained 3.9% this past week, marking its best week of the year, while the Nasdaq Composite rose 5.3% and the Dow Jones Industrial Average advanced 2.9%.) This was one of the best weeks this year to be playing the upside.

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