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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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Five Day Swings. A Monday Morning Story About Option Playing

So we all woke up Monday morning to yet another selloff. Investors are pissed. Margin calls are going out. If your trying to save for a downpayment for a new house and you have money in the markets it's a double whammy. Is there any relevancy in trying to outguess the markets at this point in time using options as a trading vehicle? Not really. When Russia invaded Ukraine the markets went array for months. We are witnessing the same thing happening now. It's nonsensical to be buying Puts on the closing on a Friday afternoon hoping for Trump to stir up the pot over the weekend yet that's what it seems take to create a winning trade. Everything is screwed up. Market volatility causes option premiums to be priced in a way to disuade traders from entering into postitions. Here is a case in point. Carvana dropped twenty dollars last week. Just below you can see it's chart. Having said all of this the remainer of this blog castes a shadow on everything I have just said. Please read about what happened this morning.
The markets dropped on the opening this morning and Carvana also dropped and then quickly regained what it lost. You can see that drop at the tail end of the five day chart shown above as it includes the first thirty minutes of the Monday morning trading. It was in that moment of fear that some option traders took advantage of by opening up new positions. You can see one series of Calls I posted just below on Carvana trade down to the $5.75 price point. An hour later these same traders could be out at a profit. In a way that goes against everything I just said about being able to successfully trade in these markets. Now here is it's thirty day chart. Used car prices might start to go up.
Now here is a look at these same Calls that traded down to $5.75 two hours into the morning's trading action. They have doubled.
Now for a comment that is somewhat unusual. Yes you can sit around all weekend and look at charts and speculate as to what might happen in the coming days. Yet that is something many successful option traders don't have to do. It's about catching short term market swings and it's usually easier to justify purchasing Calls than Puts like in what happened this morning. A fear factor plagued the markets this morning after the entire world watched in disbelief Trump doing an interview on an airplane over the weekend telling reporters he doesn't really know what the term stagflation means and telling eveyone he wants to target a whole bunch of additional countries with tariffs. The futures markets panicked after witnessing that interview. Is this goon out to destroy his country? Why is he now talking about his abilities to win yet another future election based on the great work he is now doing? I can see why the markets opened in a state of panic. Reacting to panic. That's the new game option traders are adapting to. *** Here is how the same Carvana Calls closed the day.

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