3:00am (EST)

I was up late last night working on a few trades that I might deploy this morning when the market opens. I rarely do these types of trades but I wanted to show you another aspect of option trading that occurs every single day that most people never see or can imagine.

We are approaching expiration week on the May options which expire NEXT Friday. So they have 7 days before they expire. We had a lot of success with April expiration week and this time is no different. When options have less than a week before they expire, they can be volatile and really liquid. They are cheap option plays that are no different than rolling the dice at a craps table. Plain and simple. But I got some good odds for you.

The futures are up strong at 3am (EST) with the Dow futures up 56 points (0.5%). The S&P 500 and Nasdaq futures are up as well. This means we are looking at a higher open. The only problem is that the market is still six hours away from opening. A lot can change.

Like I said, I wanted to show you a few trades that I might put on this morning. But. It may only be for 5 minutes, it might be for an hour, or it might be all day. It just depends on the stock and the way the market is moving but there is no way I can write a blog and trade. I’m good but not that good.

Bank of America (BAC, $13.51, up $0.82)

Buy to Open 25 contracts May 17.50 calls (BYOEZ) Bid: 18 cents, Ask: 19 cents

I have a limit order of 26 cents. The stock was up $1.21, to $14.72 in after-hours so there is no way or knowing where we open. If I get in at 25 cents, I’m out at 50 cents.

General Electric (GE, $13.96, up $0.29)

Buy to Open 40 contracts May 15 calls (GEWEH) Bid: 11 cents, Ask: 13 cents

I have a limit order of 14 cents. GE could go under the radar on the bank news and hit a high of $14.39 yesterday. Higher highs and lower lows have me thinking GE could make a burst through $15.

American International Group (AIG, $1.95, up $0.11)

Buy to Open 75 contracts May 3 calls (AILEG) Bid: 5 cents, Ask: 6 cents

I have a limit order of 7 cents. AIG is approaching serious resistance at $2 (I can’t believe I even wrote that as low as the stock is) and could make a run to $2.50 if it can get some legs. Losses are improving…they only lost $6.6 billion this quarter. Yipee!

Out of these three, GE looks the strongest but BAC could surprise and gap way higher. AIG is still AIG…

Good luck in the pits! Look for an update around 11:00am (EST).

Rick Rouse