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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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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 are often mispriced. I don't to go off tangent in talking about this but look at their January Calls with a striking price of $9.85.
How is it really possible to put a price on them when there are so many macro issues that might affect this stock's price half a year or so down the road? What would happen if Trump decided to drop his tariffs? The stock would probably jump 20%. What could happen if inflation kicks in, if massive recalls happen, if auto repo rates surge upwards or if the price of gas goes up? Who knows what could happen. Owning long term Call or Put options on Ford sets you up to get you're investment whipped around. Look at Ford's one year chart.
Going forward nine months or so, $7.00 or $14.00 is not out of the question for this stocks price. Yet this blog isn't really about Ford long term options. I want it to be about how you can play one month out options for short term daily trades on certain days in the week based on the assumption that thier option pricing sometime get bent out of shape when overly dramatic short term swings happen. Case in point is today's action in the stock Waste Management, on this day being a Friday. It's symbol is WM. Thats the best day on the week when I see this kind of activity happening. Here is it's five day chart. It kind of ended up going sideways for most of the week.
What I really want you to focus on is it's trading action on Friday. Here it is below.
Notice at around 10:15 a.m. and 12:50 p.m. it kind of touched it's lows of the day. Now look at how the May 16th Waste Management 230 series of Call options traded out the day. They kind of got mispriced when the stock went into a slight morning dip. They began to trade more like one day options than two week out options.
Had you gotten in around lunch time at the low of the day and gotten out sometime before the end of the day you would have made out very well on your invesmtent with very little risk. Day trading one month out options or in this case two week out options that get mispriced on a Friday morning down draft is often an excellent, relatively low risk trade to make.

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