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Costco Options With Two Days To Go. Something To Consider , As Strange As It Might Sound

First, Costco is down $44.79 over the last ten trading days. The company sells food and everyone needs to eat. The chart looks like it might now want to rebound. Down $44.79, it's crazy that it could sell off that much in such a relatively short period of time. What about other stocks in this price range like Netflix? Well the Netflix stock is priced at even a higher level. It's at $1,257.00 today and yesterday afternoon it was at $1,213.00. Yes, today it was up $31.30!. My point is high priced stocks can make big moves and that's what makes Call and Put options on stocks like this so potentially rewarding. Most people would never consider trading in Costco options. I get that. More on that later. Now back to Costco doing so poorly as of late. It's now Thursday morning before the markets are open and here is a look at it's "at-money" Calls and Puts. Notice the light volume of the "open interest'. The two numbers reported here are 480 and 358. Whe...
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Netflix Options Are Humbling

The little small fish players can't play them. Especially on the morning of an earning's release. Here is one comment on what happened.
Is that observation something we should keep in mind (the weakening dollar value aspect) on other soon to be reported earnings reports? The pricings on Netflix options are astronomically high on the eve of their quarterly earnings report. Here is it's five day chart.
Now here we are going into a Friday morning opening fresh after an earnings release and here is how the 1275 series of Puts closed on Thursday at 4:00 p.m.
Are you able to see the price they closed at? They closed at $39.75 a contract! Are the Calls any cheaper? Not really.
True to form there are slightly more outstanding open Call positions than Puts. Now image this. If you own a block of this stock you can sell the Calls and Sell the Puts simultaneously. If the stock closes up ten dollars on the day the Puts expire worthless and that money now belongs to you. Then you would have to buy back the Calls which would then be worth about $9.07. So on one hand you made $39.75 and on the other side you lost $32.18. If the stock goes down $10.00 on the day what you make on selling the Calls more than offsets what you have to pay to buy back your Puts. It becomes a bet on the stock staying within a range of $40.00 of where it closed on the previous day. Forget trying to play them. Stick to the Tesla, Caterpillar and Boeing type of option trades. Now this. A readout at 9:43 a.m.. This is game changing news. The stock is down $54.64.
All of our calculations are suddenly thrown out the window. A straight buy of Puts would have generated a gain of about 50% in the first ten minutes of trading. A better gain had you purchased Puts twenty or thirty dollars "out-of-the-money". Yet let's forget the doing the spread angle on this stock. Or this. Think of the money made from just selling a Call (if your account would allow you to do that) prior to the closing on Thursday! As we will see, a $41.00 Call will be expiring worthless in one day! The charts kind of suggest that this could happen. Netflix options should be viewed as holding "dynamite". Now a 10:30 a.m. chart.
This kind of action can't be reversed. Now the closing numbers on the day.
****
** Alphabet (GOOGL) reports after the close on July 23th. Here are is it's five and thirty day charts.
If you are using You Tube this summer shame on you for not owning Call options on it in the last thirty days. What were you thinking?

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