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Costco. It's Short Term Options

 Options on stocks in the $1,000  range often move  50%  or more in only a matter of  minutes on the opening on Wednesday and Thursday's . The trick is to  anticipate correctly which way the markets are going to move. That's a fools game you might say? Yes and no. It may not be a game you ever play but it might be something to consider to put in your bag of tricks when you are on a role. One thousand dollar stocks sometimes move five, ten or fifteen dollars on the day. If you have profits it's best to take them quickly. Costco is a prime example of that. Let's look at this mornings action. First it's five day and one day charts. Tuesday's trading was kind of choppy. Might it drop on the opening tomorrow? Here is a look at where the 1,035 series of Puts closed that expire this Friday. They closed at $8.50. It looks like Costco cycled up about five times yesterday. Given a weak market opening doesn't it stand to reason a three or four or five dollar will be i...
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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!

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