Options trade summary – Feb. 3, 2022

Wednesday’s trading: a sudden save late in the afternoon turned the market around

ESH22 Feb. 3, 2022. 15-minute bars,

An interesting day, with a slow push down starting overnight and continuing until late in the afternoon, when Amazon announced Q4 earnings and saved the market.

The option trades posted after the previous day’s close focused on the 4475 and 4500 Puts expiring Friday, and called for subscribers to watch for a bounce overnight that stayed under the 4565-75 level. (The Tuesday close was 4577.25).

The idea was to watch for a bounce that would drive the price of the options down a little to get a cheaper entry, but it never happened. The overnight prices for the 4475 Put ranged from $11 to $20, which made them expensive for our trading style. Nat prefers to enter option trades at prices around/below $6.

The options would have been profitable during Thursday trading. The premium got up to $34 around 2 p.m. when then market looked like it would drop below support around 4450. Once Amazon came swooping in, the premium melted like a popsicle on the Fourth of July.

4475 Put on ESH22 Exp. Friday close.

The Put traded around $8 after the close. It expires tomorrow (Friday) at the close, so it may be profitable tomorrow if the market decides that the euphoria induced by Amazon’s sales is a little overdone. As well it may be.

Subscribers who got the best overnight price and exited somewhere before the crash had the potential for a decent profit Thursday. Subscribers who entered after the Wednesday close and are still hanging on — or those who may enter tonight — still have hope for a profit on Friday.

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