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. That's why the heading is called "Late to the Party Option Players". It's using options as a trading vehicle to reacte to a situation as opposed to anticipating a situation to happen.
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 situation? Are one week out options alse something to consider?
One alternative way of playing this is instead to purchase next weeks options, the May 16 th options, (you pick the Calls or the Puts) and sell against them this weeks offsetting option in the hope that this weeks options will burn themselves out and expire worthless or near worthless. Not many traders are doing this simply because they are unsure of how that would work. Here is how it closed out the day.
Here are what the 101 Calls that expire this Friday closed at. No real change.
Now the 101 Calls and the 101 Puts on the following day, a Thursday. Things have changed. Loook at how expensive the Calls have become. Is it time with only one day's trading life in these options to take your money and run? Or perhaps take most of your money and run or even take some of your profits and put them into a hiher priced Call series that expires tomorrow? Look at how cheap the Puts have traded down to with one day to go!
To be continued. Here is how the "out-of-the money" Call options with a striking price of $106.00 we alluded to closed out the day on Thursday.They closed at $.33 or thirty three dollars a contract.
If the stock was to ever pop $2.00 on the day these one day Call options would do wonderfully well. Option players playing with profits can sometimes afford to make trades like this. Now the Friday closing readings.
The 106 Calls if we were looking at on Thursday were difficult to play. They did at one point hit $.50 on Friday morning. Here is how Disney traded interday on Friday so picking the top on these Calls would have have been near impossible.
Missing from all these charts are the May 16st 101 Calls that we talked about way back at the start when we suggested two week out Calls instad one one week out Calls. Back then they were trading at $1.96 and here they are now.
What's next? Here are next weeks 106 Call and Puts. Could there be another set of "Late To The Party" investors with fresh eyes wanting to come onboard? Once again, the action seems to be in the Calls and not the Puts. The markets never end.
Do you think you want to play them? One final note. Are early mentionings of doing a spread, meaning buying the Calls one week out and selling against them this weeks Calls would not have turned out very well. What you would have made on nexts weeks Calls would have being nullified by having to purchase back this weeks Calls. In future examples I will try to show you how this strategy might have worked. ****A Monday May 12th update. Up again.
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