In the last few weeks I have focused on the erratic trading patterns of Carvana. Tariff talks are supporting the entire group of American used car sales retailers at this period of time. (My viewers seem to prefer blogs on stocks like Boeing and Costco, stocks they think they understand better.I get it). These options expire in two trading sessions. Two day options are also a topic many of my readers do not like. In any event let's start with what the indexes are doing at 10:40 a.m. on July 1st. It looks like it is going to be a strong day.
Now look at this one day chart.
The markets are up.The Puts on Carvana got crushed on the opening and quickly recovered. Look at it's chart. Now it looks like the stock wants to rebound back up again. It's time to bail on the Puts which at about 10:40 a.m. had hit their lows of the day and then more than doubled in price about forty two minutes later.
Now the Call options two hours into the day's trading session. They have doubled in price. One of the things this means is that anyone who doubled their money on the Puts in the first hour of trading could have reinvested their profits into the Calls and doubled their money again within the next hour. Here is the proof of that.
See the chart below to see the late morning comeback it enjoyed.
Will it now break out just after noon today to further move to the upside? At 2:00 p.m. it seems to be running out of steam. If you have a profit just take it. Just say thank you.
Here is an end of the day chart and a look at how the 335 series of Calls closed the day. My comments about walking away at noon with profits turned out to be a mistake.
***If you look again at it's one day chart you can see there was yet another opportunity to trade the downside later in the day! That was from 2:00 p.m. to 3:00 p.m. when it had another decent drop in price. Notice how few contract traded on the day. I did a blog on this same stock last Friday and on that day the volume on one series of options I was tracking was over three times greater. Look at it's five day chart. This stock can really move.
You almost have to watch it every half hour to trade it. Most traders don't like playing options on the same stock more than once a day unless the stock is moving up or down by ten or fifteen dollars on the day and the series of options you are watching expires. In that case they might be attracted to the higher or lower "out-of-money" option series as the day progresses. This is a great stock to play options on on a Friday if you catch in going in the right direction.*******Option trading like this isn't for everyone.
***********Some traders like doing things like sitting on "one-year-out","Ford" Calls. Here is how one series of Ford Calls that expire next June (eleven months out) out traded today.
Look at how they jumped 27% in one day. That doesn't happen very often with long term all options. What caused this?
A conversation of Ford options will be contimued in my next blog.
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