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This article covers a trade of $270 Strike CALL expiring on December 6th.

My questions are:

  1. Can you buy a put or a call on the day of expiration?
  2. What will be this trader's speculation? The US Jobs reports was announced in the morning and the market went up and the AAPL floated at $270 between 12:30 PM and 3:45 PM.
  3. The chart shows that price floated around $270 and closed at $270.71. Does that mean the trader lost the premium for those options?
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  1. Can you buy PUT or CALL on the day of expiration?

Sure.

  1. What will be this trader's speculation? The US Jobs reports was announced in the morning and the market went up and the AAPL floated at $270 between 12:30 PM and 3:45 PM.

Most likely, either the buyer is speculating that the stock will move significantly during the day (assuming buying an out-of-the-money option) or they're closing out a short position.

I'm sure there's better names, but I've seen this strategy called a "lottery ticket". You buy an extremely cheap option (because it's out of the money with a short time to expiry) and if the stock moves in your favor, great, you might make a profit. If it doesn't, oh well, you're only out the premium. It's the kind of thing that only works (without inside information) if you do it on lots of stocks and have reason to think that the stock may move significantly (like the day of an earnings release).

You don't sit at a slot machine expecting to win every pull - you play because you think that the jackpot(s) will more than make up for what you've put in. If you can somehow tilt the overall odds in your favor (e.g. by buying on earnings dates), then you might come out ahead.

  1. The chart does not show the price went up from $270 though floated around that amount. Does that mean the trader lost the premium for those options?

Remember that you always pay the premium upfront, and you don't "get it back" if the option expires in-the-money. You might make enough profit from the payout of the option to make up for the premium, but that's just the nature of the option payout - it's not thought of as a "refund" of the premium or anything like that. You pay X when you buy the option, and you get Y (which is >= 0) when the option expires. If Y is greater than X, you profit. If not, you don't.

In this case, if the stock did not end up over $270, then the trade did not pay out. It would have to end up at $270 plus whatever premium was paid to make a profit overall.

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    Buying options before earnings dates is swimming upstream since option cost is inflated due to IV expansion. You can tilt the odds in your favor by selling expensive volatility against cheap volatility but that's a strategy above Options 101. "Remember that you always pay the premium upfront, and you don't "get it back" if the option expires in-the-money." Did you mean out-of-the money? – Bob Baerker Dec 11 '19 at 14:32
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    @Bob, no, he meant that even if the option expires in the money, you don’t get your premium back; you just get the value of the option, which may be more or less than the premium paid. – prl Dec 11 '19 at 14:35
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    @prl - 'You don't get it back if the call expires ITM' is incorrect because if the call expires ITM, you get some of the premium back via the sale of the call. If the intrinsic value at expiration exceeds the price paid for the call then you get all of your premium back PLUS a profit. – Bob Baerker Dec 11 '19 at 14:55
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    @BobBaerker prl correctly interpreted my intent. You pay the premium even if the option expires ITM. Yes you have to earn more than the premium to profit overall but I don't think of it as "getting my premium back". Once I've made the option trade, the premium is gone. The way the question (and other of the OP's questions) is framed there seems to be a thought that the premium is only paid if the option expires OTM, which is not true. (you of course know all this - I'm just trying to illustrate what I meant). – D Stanley Dec 11 '19 at 14:58
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    @BobBaerker I agree but, again, the way some of these questions have been framed is seems that the OP thinks that the premium is paid ONLY if the option is OTM, which is obviously false. Yes it's netted by the option payout but I'm trying to illustrate that they are distinct cash flows and you have to earn MORE than your premium in order to profit. – D Stanley Dec 11 '19 at 15:17
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1) Yes, you can buy and sell puts and calls on the day of expiration

2) If it was a directional long call buyer, the speculation was that AAPL could rise intraday, well above $270, thereby offering a large ROI on an inexpensive option. However, it's presumptuous to assume that all of this $270 call volume was speculative long trades placed that day. It's possible that some of the volume was due to a call buyer who was closing his previously sold short call position in order to book profit and/or prevent loss if AAPL rose over $270.

3) It's impossible to know whether traders made or lost money on those long trades because the option has expired and there's no way to know what the calls cost as well as what they were selling for intraday (Time and Sales), as well as whether those trades closed intraday or held through expiration.

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