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CarMax Puts?

 Here is the number. Call in to listen to their just released quarterly report. You won't have to talk to anyone. It is 800-839-1247. In about five days this link will disappear. Please listen to it. I listened to all of it once and to the first half of it two times. What I learned is that their retail car sales on the quarter compared to the same quarter a year were up 6%. They purchased 336.000 vehicles from the public, up 7% and 48.000 from dealers up 38%. Their average retail sale price was $26,100, down $400.00 per vehicle from last year. They doubled their share buy back program. AI technologies are now helping them operate more efficiently. Everything seems positive. But wait, we are talking about  the used car business and what could happen if consumer confidence suddenly starts to wain? Look at it's three year chart. It now sees to be hitting a rough patch.  Now a one month chart.  All of this talk about tariffs and what level of tariffs will be imposed on n...
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Living on Kraft Dinner?

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 "out-of-the-money" contracts which means the stock will have to go up in price over the coarse of the trading day to make a profit. One extreme payout shown here was nine dollars turning into four hundred and forty five dollars! It required the stock to jump twenty dollars in one day. How often does that happen? Not very often however it sometimes does. 2) Deere. It jumped $16.33 on the day. That doesn't happen very often.
In one case here, eighteen dollars went to six hundred and sixty eight dollars. 3) Tesla. It was up $12.68 on the day but lost some strenght towards the end of the day. Option traders widely watch and play Telsa Calls because the stock is known to regularly swing ten dollars in an given day.
Does all this trading seem to good to be true? These few stocks mentioned have a reputation for wild swings like this. What's more, they often trade up and down like this on no real news. Other stocks I follow like First Solar and Snowflake sometimes also have crazy price swings however they are most usually as a result of specific market chatter. Then there are price swings that happen as a result of changes in a companies's operating performance. One price swing that happened on Friday really stood out. Most stocks jumped upwards on Friday but not Eli Lilly. It had a really bad earnings report earlier in the week and then limped back up a bit on Tuesday and Wednesday. Then on Friday the stock got slammed again. Look at these two charts and look at how the Puts jumped up in price. First it's one day chart and then it's five day chart.
Why do I bother to mention one day options on Eli Lilly? Well experienced option traders might have realized a second wave of panic selling might come into this stock given the magnitude of the previous sell off. Bad news reports sometimes have a ripple effect on a stocks price. Good option traders might have recognized that a Friday would most likely be the day of the week when this would happen. It did. Really smart option traders are not having to live on Kraft Dinner.

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