Featured

Another Attempt To Explain Exxon Options.

There are times I feel safer playing Exxon Call and Put options than I do playing options on other companies. Why? Well today this happened and the options didn't move to much. What the heck was all that stuff? It was information that flows. It's humbling to read it. There are so many parts in motion which somehow mesh together to create Exxon's price at any one momeent. What I like about trading Exxon is that when it moves, it moves quickly. That plus when it does move the options on them move a chunk at a time. That can be a good thing. Here is Exxon's five day chart. It's had some recent really big moves. I picked something difficult. Two series of options on Exxon that expire at 3:00 p.m. tomorow. Here is how they closed today, a Thursday. Let's be clear. This is not a situation I would like to be in. Which way is the stock going to move on the opening? I note that there are four times more Calls outstanding than there are Puts. It's not uncommon t...
Post a Comment

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?

Comments

Post a Comment

Popular posts from this blog

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 slightly 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-ma...
Read more

Waiting For A Drop On The Opening On Bad News - Eli Lilly

Image
Here is the bad news. The company is Eli Lilly. How bad is this news? Well look at it trading in the premarkets. So what do I think? I think the news is a setback of sorts, but not really all that bad. The stock is going to open lower, that's a given. It's like trying to play Boeing after an announcement that an airplane has crashed. So the stock is going to crash and it might have a small rebound and then it's going to slide down some more. A test of sorts will happen sometime in the afternoon. It might stock falling but then where will it go from there? The best case scenario is a recognition that investors got it all wrong and the stock ends up flat on the day. Yet there might be more of a downward dumping of the stock on the close followed by a selloff on tomorrows opening. Should option players be jumping in to play the upside on next week's Calls? That is the question. Here is a look at Boeing on the days after a crash. Day two after the crash was equally as ...
Read more

Another Blog On "Vinfast"

Image
There is so much to read about this companies history online. Do your own homework. Their success is not dependent on what ends up happening with their sales in North America. They are nimble. There are plenty of auto factories all over the world now for sale they can acquire. They have dabbled in Australia. Having access to money to keep going doesn't seem to be their problem. Rivian also seems to enjoy this advantage. Vinfast is currently building a new plant in India which could employ thousands of people. That's an emerging new market. New relationships are being built and new investors will be coming onboard. Are option players looking at this stock? Not really if we look at these "one-month-out" Calls. What about Calls further out? What about next January? Here is a look at the three and four series of Calls. Nobody seems willing to bet Vinfast Calls. Now this. Here are two snippets taken from a blog I wrote about this stock back in early December of 2024. ...
Read more