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How To Avoid Time Value Traps With Last Week Options.

This blog is not going to be an exhausting study of this topic. I just want to show you a few charts found in recent blogs and comment on which ones seem to skirt the issue of "time-value-concerns' and which ones don't. 1) Avoid Thursday at the close Call options. In this case Thursday is the second last day of the above chart. If you guess the wrong direction on the close it's going to be game over on Friday when the options expire. Thursday at the close on options that expire the next day are the biggest time value traps you can buy into. If the stock moves in the wrong direction it's game over. 2) Ford on a Monday going into Tuesday. On this chart April 13th is a Monday and Tuesday is the 14th. Can you see Ford closing strong on the close of the 13th? It would make sense to get in on the stong closing because these Calls would still have four trading days to recover if Tuesdays opening was not all that spectacular. 3) This time it's Caterpillar and it...
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Exxon Calls Options And War. What's Happening This Week.

Last Sunday I started this blog and never posted it. Here is how it started. The next few weeks will not be normal times for Exxon options. Trading them for the last couple of months has being a walk in the park with crude oil prices stuck in a sideways moving price range. All that is suddenly going to change.
Now on Tuesday afternoon I am showing you this five day chart and what one series of this week's Friday expiring options are trading at. The 152.50 series of Calls that expire this Friday.
Now this at 3:13 p.m..
Let me point something out. Exxon spiked on both Monday and Tuesday morning. It seems to do that with the world waking up to new problems. In the opening minute or two of each trading session a feeling of panic is in the air. Will this happen again tomorrow morning? In my most recent blogs I have being emphasizing the new need for option traders to adjust their trading horizions to interday moves only and to avoid to trying to create overnight holdings. Let's what and see what happens this time. Will they spike on the opening? What's this? Wednesday premarket trading numbers.
Premarket trading numbers can often change quickly.
How likely is this to happen? Now this at 8:31 a.m.
Now Wednesday at the close. The jump didn't happen.
So here we are a few days into this exercise and we are losing the battle. Let's see what tomorrow brings. Thursday wasn't much different.
Now Friday morning. A jump in price. The real action was in the 150 Calls, not the 152.50 Calls.
So what really happened? Exxon did suprising little in mid week trading. There was a Friday morning spike upwards. It reflected the uncertainty of what might happen over the upcoming weekend. Smart traders were buying the "at-money-Calls" on Thursday just before the close.

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