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Boeing Calls. Learning To Catch The Action

It's Monday morning and earnings come out tomorrow. Only a small number of new Call and Put holders are lining up to do battle. Here is it's five day chart. Here are one series of the Boing Calls and Puts closed the day with it's earning report coming out before the opening tomorrow. It's the classic case of having more outstanding Calls than Puts before any earning's report. Option traders are inherently optimistic. Could you buy both a Call and a Put and hope that the stock moves more than about $10.50 in one direction? That's what it would take to break even. I don't like such a strategy however it does sometimes work. Remember that Tesla dropped about $26.00 on the opening last week after it reported? Here is how Boeing closed the day. Here is the effect of how this strong close affected the 235 Calls and Puts. Both the Calls and Puts were pretty boxed in on the day. Let's see what the morning brings. It happened. It's earnings where releas...
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Costco Again. One of The Most Explosive Stocks For Option Trading

 When it comes to option trading Costco options have a couple of things going for it. First, the reliability of it's business model. It's the retailing of the stuff people like to buy. Secondly they have a massive distribution system and it's unlikely that any new competitors will come out of the woodwork and disrupt what they have going. When you buy options on Costco you kind of know your positions you purchase are not going to blow up and obliterate you for reasons you never expected. Also on the plus side for option traders is that the stock moves up or down quickly. On the other hand it's always  difficult to rationalize the exercise of throwing money into playing the downside ( buying Puts) when we know there will be traffic jams in Costco's parking lot this Saturday like any other Saturday. Costco is not going to go away. Here is Costco's five and thirty day charts. First the five day.

The five day chart shows it jumping in price on last weeks earning report. I blogged about that last week. The Call options went crazy last Friday, especially the ones that were "out-of-the-money". Now it's thirty day chart. Today is Tuesday  at 10:12 a.m. and the short term options on Costco expire this Friday.
The stock now is trading at $1,051.75. What if, and this is now this is highly conjectory the stock were to suddenly drop $15.00 or  $25.00.  It very well could . It often does. Is there any point in playing that game? In some ways there is no real reason in wanting to play it. It's not like buying Boeing Calls at the close on a Friday expecting a pop on Monday morning. There is no real strategy in buying Costco Puts. Doing so would be an exercise in buying them on a feeling or guess based on intuition rather than known facts. Now this, two series of puts that expire the Friday. It is now Tuesday morning. Let's watch and see what happens.
First, Put options that cost $4.50 that are $14.15 "out-of-the-money". I am talking about the $1040.00 series of Puts. The stock would have to drop down $14.15 plus another $4.50 just to break even. Now the $1035 puts. They cost a bit less and the stock would have to drop down even further.
Let's watch see what happens. It might be a total wipeout but maybe not. Even a small decline today might bring some rewards.  Now this.
A slight decline ninety minutes later.

I would just say thank you and get out. Trading Costco options is like walking on eggs. Four day options on stocks in the $1,000.00 dollar range are easier to play than five day options. Don't ask me why. I am still learning.

Now here is how it sold off late in the morning around 11:40 a.m. (the second chart below)
and here immediately below is  how Costco rebounded back up and closed the day. It ended up being  down only $1.26.



$450.00 went to $675.00 and $2.86 went to $5.20. in ninety two minutes. All  of this happened between 10:12 a.m. and 11:40  a.m. The fills on Costco are pretty good meaning the bids and asks are real. With the stock being so volatile they can't control the direction of which way the stock might go. T
This type of downward action isn't exclusive to Costco. See my blog of June 23th.

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