GOOG call price not following stock price

Based on evidence and history, I entered a GOOG May 13 765 call position before the market close yesterday. This morning, GOOG opens up $4 from yesterday's close and proceeds to climb up $12. However, the call price dropped and shows me at a loss. Anyone have an explanation for this discrepancy? I've never had this experience - the stock goes up, the call price goes up.

Typically you wouldnt enter a position going through earnings however most people bought the news on GOOG and the professionals shorted the position to make a quick buck. (Read Market Makers Edge). The price should be ok in time, you will just have to be patient.

I can understand the pros shorting the stock, and i understand about not going through earnings. What i can't understand is why the stock went up and the call price did not follow. In fact, the call price at the opening, when the stock was up from yesterday's close, was lower than the price i paid yesterday despite the rising stock price. FWIW, i closed the position shortly after my first post for a nice profit. my concern though is going forward - how do i know when a stock price rises but the call price does not follow? if that happens again, it could significantly affect my trading. My understanding is that supply/demand dictates options prices just as it dictates stock prices. That said, this is the first time in my trading experience when a stock went up but the call price did not follow and went down in stead.

Supply and demand do not value price like the stock price. In any derivative the market maker chooses prices and can manipulate prices to make you get out of a trade that would end up profitable. THat is why I never look at my brokerage account unless I have indication that the trade is over.

I had the same experience with AAPL over a year ago-when it was flying up. I actually got caught and jumped out with a loss. My mentor told me (One of Gary's longtime students) that the Market Makers are occassionally trying to flush folks out of positions. I do not quite understand how it is done, but they have the power to cause movement in a stock. It only works with those who do not know how they operate. I have since read Market Maker's Edge. The tactics by MMs seem to be much more prevalent in the "Hot Money" stocks such as AAPL, GOOG, FB, NFLX, etc. I have only had it happen to me one. I was a little guy who simply got caught being in a trade precisely at the wrong time.

It takes time for the options price to move with the stock. The option that you bought before the close would have been inflated knowing that earning was coming out.

I am a short chart trader but I have made a note that MM's will only do this for a certain length of time if the stock is moving really "hot". Usually I have noticed around 10:30 - 11:30 the MM's catch the option cost = to the stock price.

I had followed the $'s until I learned do not watch my account watch the chart. CMG is real bad to have huge spreads until around 10:30. I don't like entering a trade with a huge trade. I learned that sometimes my option will only go as high as the spread was before the first pull back.

It all depends on your stomach...how much can you handle?

After I enter a trade I do the same thing BCT does. I watch the chart not the $$'s. Combine a 21 and a 34 together and you will see where your 55 will go. If these are too big watch small charts (13 and 21) to see how the stock is moving. Do not use the $$'s or you will exit a trade that may go your way. If and when the chart ells you the trade is not working exit PDQ!

I learned this with GS. I bought calls and watched my money. The trade should have first been a PEAK play. Within the hour I exited the trade with a +$800 loss. That is a lot of money in my book. Within the next hour had I watched the chart like a 21 or 34 I could have seen it was a PEAK play and that the stock was going to pull back and then go up. I jumped out of a trade that would have yeilded me +$1,800.

After that I started watching the charts instead of my $. I will say it was hard to do 'cuze I wanted to see my $.

I also made a new rule for myself. If I lost $'s I could not trade again until I paid into my account the amount I lost. This kept any of my losses small and I then could feel the pain of loss rather than a "Aw shucks I missed that one. Oh well!"

It made me a better trader.