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The Trap On Costco With One Day To Go "Call" Options

Let's start by saying it's 3:00 p.m. on Thursday and I am going to talk about the big sell off that Costco experienced this morning on news that seemed to take some time to be disceminated. It turned out to be regular stuff kind of news on the subject matter of last month's food sales. In the early few minutes of trading the average retail trader had no knowledge of what this news was all about. Opening markets started falling quickly. That sometimes happens. Let's move forward to 3:03 p.m.. Costco is way down in price $28.00. That's a big chunk. Might it's Call options rebound tomorrow? I don't usually find these "looking-for-a-rebound" situations to be very profitable. Might there be a second wave of opening selling pressure on the opening tomorrow?. That's the worry. Now there is more to the story that option traders might want to hear. It has to do with what happened this morning. Costco had a great fall. Look at this morning chart. It l...
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G.M. And Ford Are Buddies

Earning reports on G.M. came out.
Ford Calls were intoxicated by this news. Stellantis moved up a touch but not so much. Of the "big-three" they seem to have the most issues to deal with. So basically the bet was on how G.M. was going to do this quarter and anyone watching and investing in Call options got a double on the morning action. Volumes in both of these series of options was relatively light. Let's pause for a moment and reflect on this situation. Options on automobile stocks have a repetitive pattern of trading like this and opportunies to capitalize on this event happen four times a year. Caterpillar and Deere are two other companies that react strongly to earning reports however the tranparency or the internals of what is happening within their organizations are more difficult to get a read on. Then there is the different animal called Tesla which prides itself on chatter of what might come. Option traders following these names should mark all of these events on their calendars and learn to get in the groove of what is happening. Doubles on the opening do happen more often than you think. Don't be afraid to play them. *** All of this chatter also helped the stocks in the used car business with Carvana of coarse being the biggest winner.
Here now is how these two stocks ended up closing the day.
....................
Now for a question. Do you see the 65 Puts for Friday for G.M. doing anything? I was suprised by the results and thought the reported cost of the tariffs were quite low (on purpose) in an effort to paint a brighter picture. Here is one series to watch. I don't really like playing these kinds of situations. Situations dealing yesterday's big event. There are no playbooks to follow. G.M. might need another week of time before it starts to go down.
I note the low number of the "open interest" two (2) !!!!!! on yesterdays close. Anyone who bought in today is in for a fresh and exciting ride. Automobile stocks do not usually jump that much. Will fear come into the markets by Friday? There are still three more trading days to go. (I will follow this for the next few days). .....................Then there is Ford.
The 12 series of Calls were trading at $.62 cents back a 10:24 .a.m.. Look at how they closed out the day.
Let's see what happens next, however like I have said in an earlier part of this I don't like playing these second legs of an upward jump. To be continued. Now wednesday's action. First Ford.
The stock is down a pinch. So are the Calls. Ford has it's quarterly earning's report coming out after the markets tomorrow. Might that cause a further bounce? Why were investors losing confidnece today?
Now G.M. This time we are lookig at the Puts. Yet the stock was up. Up on a day when the D.J.I.A. was down 334 points. Go figure.
Sideway moving action is always difficult to play. So what happened to the Ford Calls we are watching on Thursday? Well the Ford stock traded with everyone knowing that it's earnings report was coming out after the closing bell. It was down a touch. Would you be buying in knowing that good news will cause it to bounce on the opening? .
Now some of the news.
Will Ford bounce on Friday morning? Finally a look at the G.M. 66 series of Puts. It's now Thursday after the close with this series of Puts expiring tomorrow.
These ones might end up expiring worthless. We will see. What an interesting week for these two stocks so far. So now the final update. Ford exploded up.
Here now is it's five day chart and a look at the 12 series of Calls we were following.
............
What about G.M.? It continued to climb all week and the 66 series of Puts got destroyed.
When Tesla, Ford and G.M. all had strong weeks it's tough to go against them. It also helped that the DJIA was up on the day.

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