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Tesla And Wondering About One Day Options. Is This A Crazy Topic? You Decide But Hear Me Out First.

Tommorrow is Friday and I don't have time to babysit these options all day. You might find yourself in the same situation? Look at it's one day chart today. Now here is how one of it's Call option series were trading in the afternoon two days ago. Here is how this same series of Calls closed today, a Thursday. One of the things this tells us is that these options dropped in price by one half since 11:00 a.m. this morning. At one point in time they actually dropped down more than that before they started to crawl back up again. So it's a flip a coin situation right? Well not really. My best experieces trading Tesla options are in playing it's last day "at-the-money" or slightly "out-of-the-money" Call options on Friday starting around 1:30 p.m. and getting out around 3:00 p.m. It helps if the stock keeps rising all day like it sometimes does. Trying to outguess this stock on a Thursday evening is a waste of time. Waiting for the stock to go up ...
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The Sickly Feeling Of Sitting On Tesla Calls Last Thursday If You bought Them For Double The Price The Day Before.

I don't usually talk about sickly feelings as it pertains to "option trading". The 332.50 series of Tesla Calls on Thursday August 21st that were to expire the next day closed at $2.87 per contract with the stock closing at $320.11. What that means is at that time they were "out-of-the-money" by $2.39 and would end up worthless in value the next day unless Tesla jumped back upwards again. Upwards and over the 322.50 price.The 332.50 price plus another $2.39 just to break before even figuring out the commission costs. I also gave the example in a recent blog of how back at Wednesday on the close these same series of Call options were trading at $5.75 a contract after reaching an interday high of $11.30. Look at its five day trading chart to see what caused these drastic price changes.
With the bounce on Friday a $2.87 contract went as high as $17.45 from a low of $2.25 on the opening. That means a Telsa Call option priced at $225.00 on Friday morning increased in value to $1,745.00 in one day. That was an exceptional day triggered by the Federal Reserve Chair Jerome Powell crafting a speech to appease his listeners.
This event is now history and when you turn on your computer on Monday morning to study the markets looking for trading opportunities everything will have changed. "McDonalds" might be up $1.65, "Boeing" might be down $2.74 and "Ford" might be off $.12. If you messed up on your one contract Tesla trade last week your desire to try something different will have wained. The experience of paying $575.00 for one Telsa Call last week on Wednesday to then find it trading the next day at $239.00 with one trading day to go might be super upsetting especially if you then decided to sell it at a loss. You could have lost $336.00 U.S. in one day if you didn't have the guts to hold onto it until Friday. What does that amount of money equate to in your life? One month's car payment, one month of food costs or airfare to and from your favorite holiday desination? You could have used that money simply to buy one share of Tesla that you could hold onto for as long as you like. Instinctly I don't like holding one week Call options on Wednesday that expire on Friday afternoon hoping for a Thursday morning rally. The time value premiums on Wednesday's short term options can be excessive. So think about this. Two week out Call options. They would be better right? Wouldn't all that extra time be a luxury? Sorry folks, it doesn't work that way. Two week out options seldom pan out the way you want them to. In contrast, one month out or one year out options sometimes do. All I really know is that the Tesla story will never end.

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