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How To Avoid Time Value Traps With Last Week Options.

This blog is not going to be an exhausting study of this topic. I just want to show you a few charts found in recent blogs and comment on which ones seem to skirt the issue of "time-value-concerns' and which ones don't. 1) Avoid Thursday at the close Call options. In this case Thursday is the second last day of the above chart. If you guess the wrong direction on the close it's going to be game over on Friday when the options expire. Thursday at the close on options that expire the next day are the biggest time value traps you can buy into. If the stock moves in the wrong direction it's game over. 2) Ford on a Monday going into Tuesday. On this chart April 13th is a Monday and Tuesday is the 14th. Can you see Ford closing strong on the close of the 13th? It would make sense to get in on the stong closing because these Calls would still have four trading days to recover if Tuesdays opening was not all that spectacular. 3) This time it's Caterpillar and it...
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Waste Management Calls. A Boring Stock To Play Options On. With A September 6TH Update

There is money in garbage. Trucks and trailers and landfill sites and garbage hauled hundreds of miles away like clockwork. Money, money, money. This stock is always going to go up. Buy it, hold it and if it drops just hang on to it and watch it come back up again. Yes there are options on it, options that trade in one month intervals. This month's options series expire tomorrow July 18th. Here is a look at how they traded today.
Only two contracts traded on it today and there are only 200 contracts in total outstanding. One of the things that means is that you are at the mercy of the option makers when it comes time to buy or sell. When buying you might be forced to pay closer to the ask than the bid and when selling you may be forced to pay closer to the bid than the ask.There are no 215 Calls on it, only the 210 series and 220 series. Yes there are both Calls and Puts. Now a look at it's three month chart.
If it's such a great company, why is it now down in price? Where will this stock be trading at three months down the road? Now this, a look at what one series of it's Calls are now trading at. These are Call options that expire on August 15th. Only two contracts traded on it and only 200 contracts remain outstanding.
These Call options are already $5.58 cents "in-the-money". What about these ones now three months out?
Just to break even the stock would have to go up to $232.50 on the day these options expire. It could very easily do that. Last week however it traded down $1.16 on the week. Sometimes these options can be very slow to move. It's not like playing options on stocks like Tesla or Boeing. Now this.
If their earnings report is going to be good you might see the stock now start to nudge up in the next two weeks. Some people closer to the action might be better aware of what could happen. July 31st is not that far away. For that reason alone these options might be something to consider. A strong earnings report would do wonders for this stock. Do I like Waste Management options as a trading vehicle? Not really. It's not like a Tesla or a Costco which has news on both out everyday. The bottom line is that knowing about Waste Management options is kind of a distraction. The low liquidity doesn't help the cause for trading them, yet that is not really an issue if you play them with a longer term horizon. They will always be there. Start to follow them if you wish. I will check back in on these October Calls in a few weeks time.** A Sept, 6th update. They have done nothing. Well actually they have dropped over half price in value. Here now is it's 90 day chart.
Waste Management has little international exposure and perhaps why the stock's price is currently not doing all that well.
I will revisit this blog going forward.

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