Featured

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 new vehicle sales is adding to the confusion. Could tariffs help the used car industry?  CarMax in it's earnings release seems to sidestep the issue of tariffs. Hundreds of YouTube videos focused on the used car market talk of the troubles ahead for the used car industry. People are having trouble making their car payments.  

Now this. CarMax options are staggered to be in one month cycles  Here is a look at one series of  Call and Put options which are set to expire on July 18th. Each option series is staggered  in  $2.50. increments. First the Puts which had a massive decline in value last Friday as the stock popped upwards on the results of their earning report. Remember there is still about one month of trading life still left in these contracts so buying either of these two options becomes kind of a waiting game. First the 67.5 series of Puts.


Now the Calls.


These Calls have just jumped from being "out-the-money" to "in-the-money". 

So the question now is will CarMax hit $65.00 or $70.00 first. You decide. Having one month of trading life left in both of these options makes this a fair game to play.. Might there now be a slight pull back now it' earning have come out? I think so. It's a tough call to make. Fast money trades Carvana Company options instead. It's trading patterns are wild. Here is how their one day Call options jumped on the day last Friday.

One would of had to pick 10.00 a.m. as the time to get in to capitalize on these riches.
When you can see action like this happening in "one-day" to expiring options it's difficult to get excited about thirty day options. Both however have their time and place in the life of an option trader.

Comments

Post a Comment

Popular posts from this blog

Living on Kraft Dinner?

Image
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 ...
Read more

The Little Engine That Could

Image
Walmart again. It's all I seem to blog about. Here is it's five day chart. The stock keeps going up and the option series are set up in one dollar spreads. Even a fifty cent move on the stock moves the needle on these Calls. Look at how this series of Calls was trading yesterday at 3:00 p.m.. Now here is this same series of Calls just before noon today. Thirty days of upward action like this punctuated by the off day of decline. Now notice the higher volume of trading in the series of Calls with the higher striking price. These are the ones's with more leverage. At the same time look at the five day chart on Costco. The two stocks sometimes trade in tandem. Humpty dumpty sat on a wall .... a had a great fall. Someday soon a fall might happen but what a great ride it has been.
Read more

A Fireside Chat - One Year Options and Thirty Day Options. Which is Better?

Image
Some say to think small, not big. Trying to play Disney options is thinking big. It is a stock slighty out of favor. If we start with it's a three year chart, we will see it is down by about 50% over that period of time. Now it's one year chart. If the stock can break 110 in early 2024 the sky is the limit. It does have a lot of moving parts so anything could happen. Look at these Calls options one year out. One year in options buys a lot of time.They look reasonable. If the stock ever inched up to the $105.00 price level in the three or four months these options would jump up in price by about 50%. Even more if they had really good news. Yet it's the "what-if" aspect of the equation that castes such a trade in doubt. "What if" stories just don't cut it. There are to many variables in play. Then again, why are we even thinking of long-term Call options after a December's rally? Let's switch gears. If consumers are out spending for X-mas...
Read more