First Tesla's five day chart going into Friday's mid afternoon. It's January 2nd on a Friday. Is it time to make another trade to end your week? Can you trade Telsa options that expire in one hour? How stupid can you be? That's one way to look at it. You can see it jumped upwards on the opening and then lost that gain. It is now off over $20.00 from it's morning high.
On the surface it appears that there there is no quick way to make money on this situation. If there was everyone would be playing them. Hold that thought. Look at these Calls which now expire in 55 minutes (for retail traders on Friday's last day to expiring options expire at 3:00 p.m. and not 4:00 p.m.) and look at the open interest number from the previous day.
Why does it only read 290 contracts. Doesn't that number seem small? Well it has to be remembered that yesterday the stock closed just over $12.00 higher in price than where it is now so these were at that time expensive "in-the-money" Call options at the start of the day and Call holders where at that time hoping for a quick bounce which then happened. Lucky option traders may have played the stock both upwards on the opening and then downwards on the rest of the day. Let's look at the 450 Calls and see what yesterdays closing interest was.
The open interest in these more affordable "at-the-money" contracts on yesterday's close was just shy of 6,000 contracts. Yes the interest in playing "one-day" to expiring Telsa options is huge. So at this time of the day the damage to the morning's Calls is done. The overnight Call holders had the chance to cash out with a decent profit in the premarkets or in very early minutes of trading and even greater profits if they switched gears and used the Puts to play it the opposite way. Tesla sometimes trades like that. Let's now look at it's one day chart in the mid afternoon.
It's had a four hour straight drop. Look at the $437.50 series of Calls at 2:05 p.m. now trading at $1.45. Guess who would be buying them at this point in time? Traders who are triple dipping, meaning the traders who sold out of their Calls in the first minute morning rally and who then picked up some Puts and who have now sold them out. Such a strategy sounds complicated but it really isn't. If they win or lose on this last little trade it really doesn't matter. They would be wagering only part of their gains. At 2:47 p.m. you can say thank you to the options bought at 2:05 p.m. and cash out again.
$1.45 to $3.95. In once again at 2:05 p.m. and out at 2:47 p.m.. Almost 15,000 contracts traded during that period of time. A message to my readers. My hope is that this blog is a wakeup call. Tesla last day options can be one of the most powerful trading vehicles on the DJIA exchange. Here is how the 450 Calls traded on the day. The high of the day was at 9:31 a.m. as it popped on the opening.
Now the 437.50 Calls.
This last chart shows best the 2:00 p.m. rally. Not all Friday's are this volatile.
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