The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “What is an intraday stock reversal?” Lucky for you, an intraday stock reversal is exactly what it sounds like. It is a reversal in the stock price either from low to high or high to low that happens intraday, meaning in the same trading day. And what we’ve actually found in research, though this research is limited to just earnings trades and how stocks trade around earnings, but it could easily be extrapolated out because we did so much research on this, is that when we see stocks open, there’s about a 50% chance that the opening price is the high of the day. We end up seeing that a stock opens at say $100, there’s about a 50% chance that that opening price is the high for the day and the stock may close lower or may close higher. Now, this is irrespective of the day prior. A lot of people would say, “Well, if the stock closed at say $49 and then tomorrow, opens at $50, it’