I’ve got a challenge for you.
And fair warning — it involves homework. Real homework. The kind where you actually build a spreadsheet, collect the data and see where it leads.
If you’re willing to do it, I’ll be impressed. And if you actually follow through and send me the spreadsheet, I’ll send you a sweatshirt.
Here’s what I’m trying to figure out: Do pre-market options on the Magnificent Seven (MAG7) stocks actually offer better returns for the same expected move, or are we just chasing shiny objects at 7:30 a.m. ET?
I have a theory that market makers may be inflating premiums during extended hours even though the expected move in the underlying stock hasn’t materially changed. But I need data before I’m willing to believe it.
That’s where you come in.
The Assignment
Here’s the process.
Pick one of the Magnificent Seven names, such as Tesla (TSLA) or Nvidia (NVDA), and build a simple spreadsheet.
For every Monday, Wednesday and Friday expiration between now and Aug. 17, record the market maker’s expected move and calculate the return on investment for a credit spread placed just outside that range.
Maybe the trade offers a 15% return. Maybe it’s 20%. Whatever the number is, record it. That becomes your baseline.
Then, on Aug. 17 at 7:30 a.m., when pre-market options become available, collect the same data again.
What I’m looking for is simple. Does the exact same spread suddenly pay 25% or 28% instead of 18%, even though the expected move hasn’t changed very much?
If it does, that tells us there’s extra premium in the options that may not be justified by the underlying risk.
The expected move for TSLA or NVDA shouldn’t change dramatically overnight. If the pricing becomes richer simply because the options are trading during extended hours, that could represent positive expectancy worth investigating.
Why the Data Matters
You’ll only end up with about 20 days of observations, but that’s still more research than most traders ever conduct before risking real money.
This isn’t about guessing.
It’s about building a data-driven framework to determine whether pre-market options provide a measurable edge or whether the pricing behaves exactly as we’d expect.
Whenever the options market introduces something new, I like to compare it with historical pricing behavior.
If pre-market options follow the same volatility and time-value dynamics as regular trading hours, that’s useful information. If they don’t, that’s where opportunity may exist.
Most traders spend their time searching for new strategies without ever testing whether they actually work.
I’d rather collect the data first.
So here’s the deal: If you complete the spreadsheet and send it to me, I’ll send you a sweatshirt. On Aug. 18, I’ll pull the names from the chat and see who actually followed through.
More importantly, you’ll walk away with something far more valuable than a sweatshirt.
You’ll have real data showing whether this idea deserves your capital.
Now don’t forget to join us at 10 a.m. ET weekdays for Opening Playbook, and at 3:30 p.m. ET Closing Playbook!
Nate Tucci
Tucci Trades
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
