Friday Last Day To Expiring Calls on Ford

What's going to happen with the options on Ford today? Can daytraders expect to make money trading them? Let's try and answer this question. This blog is not as easy to read and understand as my previous blog on "last-day-option-trading" on the stock Tesla . Tesla has bigger one day price swings than Ford does. Here is what Ford's one day chart looks like as of 11:00 a.m. on a Friday morning.

Let's back up a little bit. Look at how thse two series of Calls and Puts at 9:40 a.m. are trading. They both expire today.

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If the stock was to rebound suddenly up to the $13.05 range the Calls could go up to $.13 or $.14 cents a contract from their current $.11 ($11.00) per contract price. It's best to buy them in quantities of 25 or more contracts at one time. If you lived in the U.S. and got free commissions trading, options like this could be a very quick and profitable experience. In Canada where I live not so much so. The commissions would eat up a chunk of the profits. Now this, a second look at 11:00 a.m.. The Calls did go up to $.15 but have now sold off again.

Here is its chart as of 11:25 a.m.

Now let's move up to 11:50 a.m. Here are a look at the Puts and the stock has moved upwards again.

Two cent a contract option prices on last day to expiracy option trading set off warning bells to experienced option traders. Why, well here is a secret so few traders want to share. At this point in time the option makers have to do a balancing act. Why let option traders buy in at two cents and sell out at three cents to then create a return of 50% on their investment. That's what would happen when an option contract moves from $.02 to $.03 a contract. In theory that could happen multiple times in a trading session. The option makers must know how to somehow hold the option markets steady on a friday afternoons. On rare occassions unexpected news may come up. News for example of an auto plant exploding or Trumph saying something dumb. I think his press secretaries smart enough not to let that happen. With Boeing it would be news of an airplane crash. That would change the stocks price very quickly. With all that in mind let's look to see what are the indexes now doing? They are up.

My thoughts at this juncture is that the option makers would like to see this stock at at $13.00 at 3:00 p.m. or just slightly above. Look at how there isn't much happening at this point in time with the other auto stocks I follow. It's easlier for the market makers to hold a stock steady when the entire sector is trading relatively flat as it is in this case. That is something which should be considered.

Now here we are going into the three 3:00 p.m. deadline, the time that retail traders have to close out their positions. If you don't sell out then at some point before 4:00 p.m. you will be sold out by the brokerage house. Yes they watch everything.

Ford is above $13.00 so the Puts will be expiring worthless. Mission accomplished for the house. Now this, a look at how the stock and the 13 series of Calls and Puts traded on the day.

Had you bought the Calls back at 9:41 a.m.for $.06 cents back at 11:00 a.m. you would have made money. How much money?. Well at 3:00 p.m. those Calls were trading for $.11. Not bad. Yet at 1:35 p.m. they were trading at $.03. It would have taken guts to be buying the 13 series of Calls that late in the day. Look at the chart. What is there to learn from this blog? One thing is that last day options trading at $.02 a contract in the second half of the trading session are most likely to be a well orchestrated trap. The option makers can't afford to let them go up. More Ford one day option stories to follow. When I see old men driving their Mustang convertibles I wonder if their cars were paid for by the profits derived from last day to expiracy Ford option trading. *** Read my May 22nd, 2021 blog on Ford options when Calls went from $.01 to $.47 in less than one trading session.