Featured

Late To The Party Option Players - Disney

Can late to the party option traders make money? It's something to consider? These Call options expire this Friday. There was news on it before the opening today. The second chart below a few minutes later shows it hanging tough. At 10:01 a.m. we now checking out the Puts. The bid and ask on the Puts are very tight. That also makes us ask what happened to the Disney 101 Calls that we first looked at? Here is what the chart now looks like. More Call option players have jumped in to play the upside that the downside. Might one do a spread and try to play it both ways hoping for a breakout either way? That's an option to consider. Disney has being a dog of a stock now for a year so might some profit taking set in? How is Disney going to pay for another theme park? With that on their plates forget any share buy back programs. They are taking on new risks in a period of global uncertainity. Are late to the party option traders best just to stay away from this unexpected situ...
Post a Comment

Two Hour Options On A Friday Afternoon With The DJIA Down Over Three Hundred Points

A stupid move? Right? Maybe. The thought of buying options that expire in two hours. Let me try to explain something that might be missing in your thinkings. Here is a list of five strong stocks that everyone knows about from watching the markets of 2024. Apple, Tesla, Alphabet, Amazon, Microsoft, Meta Platforms and Nvidia. If a retracement of a morning selloff is ever going to happen on a Friday afternoon odds are you should be watching these ones if you are a short term option player. Last Friday, as mentioned in my previous blog the DJIA was down 333 points. Here now is a one day chart of Meta on that day which was Friday December 27th.
Hone in now (hone is a word seldom used) on the 12:30 p.m. time period which is 2.5 hours prior to when Friday's options will expire for retail traders. One week out options are also interesting options to consider at this same time period because they would also benefit from an after rebound or the firming of the markets after a morning drop. That's another topic in itself. Why 2.5 hour options? The most obvious reason is that "time value" premiums built into these option pricings are at a minimum. The risk is of course if the stock doesn't move up in this 2.5 hour window of time you are in trouble. Yet then again, you could buy in and and get out 30 or 60 or 135 minutes later and take whatver the current bid happens to be. At 12:30 p.m. Meta was trading at around $550.00. 2.5 hours later it was ten dollars more! What a move. Now look at this. The 590 Calls traded down to the $2.00 range on Friday around 12:30 p.m..
Look at the gain they would of had by the 3:00 p.m. sell out time! How rare are these one day trading occurances? Well loosely speaking they happen more often that you might think. How about this one, Alphabet also on the same day.
The same thing happened. Around 12:50 p.m. the Calls sold down to just over the $1.00 range. A relatively high trading volume and a relatively tight spread would have aided in making such a trade relatively easy. That plus Google and Meta are kind of in the same space. Here is where things get equally as crazy. Look at where Apple was trading at 12:20 p.m.. Yes Apple also has the very same turn around story. At 12:20 p.m. Apple hit it's lows of the day and that is when the 252.50 Calls where trading at their lows of the day of $.95 cents or ninety five dollars a contract!
.......
Whats missing from all of these details is a chart showing how the DJIA traded on the day. Here it is. 12:30 p.m. was the time to be thinking about rebounds. It's also a time ironically when most options traders were logged out for the weekend.
Do you still think trading one day options is crazy? Do I play them? Not as often as I would like. There are two things I noticed that have changed in the second half of this year in option trading strategies. First is the odds of success from purchasing Thursday one day options just prior to the close with the intended strategy of getting out at a profit in the premarkets on Friday mornings are not as high as they once were. Why is this? It seems to me that the release of government reports on Friday mornings do not seem to have the same impact on moving the markets up or down as they once did. We are no longer as glued to interest rate news as we once were. The second thing that has changed for me are the results from buying Boeing Calls at the close on Friday afternoons and holding them over the weekend looking for a five minute pop upwards on Monday mornings. (Baked into that trade were the odds of not having an airplane fall out of the sky or a noticeable part falling off during that period of time). Often times in the somewhat recent past it was a great trade. 2.5 hour options are a force to be reckoned with!! *** This news just came out as I was finishing this blog!

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