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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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Why Retail Traders Don't Play Costco Earning Reports

Options on stocks priced in the $1,000 per share price range with two trading days of life left in them are bombs waiting to be exploded. That's why retail traders can't trade them. That plus they are expensive. Earnings are coming today after the closing bell. Here is how things are set up to go before Thurday's opening. First it's five day chart.
Now it's 1,000 series of Calls and Puts. Notice the number zero in the volume of trading. This is a premarket look at the markets. Look at the low open interest numbers.
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Now look at this action. The Calls sank on the opening and the Puts charged upwards. Here first are how the Calls traded.
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754 contracts traded in the Calls. Now the Puts.
Only 61 Put contracts traded on the day. Here is a more detailed look at the same thing.
So the Puts that closed at $1,388.00 yesterday hit a high of $2,638.00 just after today's opening. Maybe it's the high cost of the options which are keeping retail traders away but that doesn't explain why institutional trading isn't catching this action. There was time just after the opening to buy in. Now this. Earnings came out after the market closed and they were in line with what was expected.
Here is a look at the five day Costco chart.
The chart now has the potential to turn into a saucer formation however it's to high of a risk to play. One week out options on stocks in the $1,000.00 range are always expensive. So let's skip forward to Friday and see how these two series of options closed the week. But first it's five day chart then followed by it's one day chart..
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Both the Calls and the Puts lost 97% of their value in one day. Both series of options had some wild trading action this week. All on an earning's report that turned out to be a none event.

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