Featured

Avis Budget and A Short Squeeze Plus Hertz Getting Dragged Into The Action

Hertz Global is on a terror. . Stocks in the $5.00 range sometimes do that. Yet really it's the Avis Budget short squeeze that is causing this stir. Look at how it jumped just over $105.00 dollars today. How often do you see a chart like this? It's a short squeeze and the stock is trading on high daily volumes. At one point this morning (a Tuesday) there was a "stop trading" on it. Trading options on it defies logic as they are so expensive. Look at this one example. These are the 700 series of Calls and the stock is only trading at 11:17 a.m. at $665.00. In other words they are $35.000 "out-of-the-money". Look at how crazy expensive they are. The stock would have to jump $105.00 or one hundred and five dollars by the end of the week just to break even! Who would be crazy enough to make such a bet? Day traders would be because they are banking on the effects caused by the stocks interday momentum. Let me explain this better by showing you an end of day re...
Post a Comment

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.

Comments

Post a Comment

Popular posts from this blog

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

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

News on Polestar , Lucid (Trading After A Reverse Stock Split) Plus Ford News And Vinfast

Image
Look at the one year chart on Polester. Now it's one month chart. What's going on? It's confusing. It was down $.36 cents on the week. If you want you can spend $.20 or $.25 on Puts and hope that the company goes under in the next five or six months. They recently raised more money by releasing more shares so it's running out of options. You can't run at a loss forever and this news will most likely scare off potential new car buyers. This actually is a low number of outstanding Put options. The consensus seems to be that it is not game over yet. Lucid started trading this week on a "one-for-ten" reverse stock split. Here is its one week chart. It was down $1.39 on the week. It's also going to struggle. Both of these stocks have challenges ahead. On a more positive note here is a chart that looks kind of perky. Ford on the week. The stock was down $.03 cents on the week and it was the 3th highest in share volume trading on the NYSE. It appears...
Read more