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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's kind on the same thing. A strong close on a Tuesday and no worries about time value issues if you caught this stock spiking on Wednesday morning.
4) Nio, the Chinese EV maker. It's the same thing. An upward closing on a Monday and a pop on Tuesday morning.
No worries here about dissipating time value premiums. 5) Now here is a slight variation on the same thing. Look at the Avis Budget chart with March 27th being a Friday. Look at how the stock closed strongly that day.
On Monday it dipped and it wasn't until late Tuesday when it started to come back. After that it was clear upward sailing. My point is that with five trading days to go in short term option trading the "time-value-trap" associated with holding short term options is not that big of a concern. ( P.S. Imagine holding Avis Calls over the last few weeks.) It was up $44.88 last Friday and $193.92 on the week. Here is it's 30 day chart.
It's a short squeeze.

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