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This One Is Too Nervous To Watch. Pfizer

This is a short blog full of twists. Try to get through it. First a five day chart of Pfizer. chart. In the past week it was up $1.05 and it was the 7th most activity traded stock on the NYSE most active list. It's in a breakout mode. Look at how it traded over the last three years. This breakout mode might last a few days, weeks or months. This stock has a history of moving somewhat slower than most stocks. A second quarter earnings report comes out July 30th. If it's good that could add a touch to the stock's price. Now this. As a general rule stocks and options on stocks in this particular price range are difficult to play and in this case everyone is following the same story. Fred down the street and John around the corner and Mark across town are all dialed into the same commentary. There is nothing that really gives you an edge when it comes to playing it. That's the problem. Here now is a look at the Pfizer "next-week-out" $30.00 series of Call optio
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"Caterpillar on Monday Mornings"

This blog may seem to be lacking in content. It is only to say that one should not purchase "last week" - "Call" options on Monday mornings.
Typically Monday morning aren't good entry points and case in point is what happened to "Caterpillar" yesterday, a Monday as it dropped over four dollars a share. One of "Caterpillars" characteristics, which in some ways is a good thing and in some ways not so good is that it often moves upwards or downwards in price on "no news". Yesterday was on of those days. The difficult part is, if you trade the options on this stock on a regular basis like I do you sometimes have the urge to want to jump in a play the upside whenever you see it sell off in price. This itch to "get back in" is most prevalent at the end of the first thirty minutes of trading on a Monday morning. This time "Caterpillar" seemed to be taking a hit and if you were able to buy in and catch a reversal you would be a hero and in doing so you would be able jumpstart your week of trading? I got sucked in yesterday. I bought in as "Caterpillar" continued to tank all day. How do you learn avoid this trap? There is one obvious way. Remember I have talked about having individual screens set up on your computer of sectors of stocks that you are watching like retail, automotive, spacs, pharmaceuticals or whatever you happen to have an interest in. In this case "Caterpillar" was the only stock on my list of "big movers" that was down. That in itself should have told me to stay away from the "Calls". Here is a look at the "Caterpillar" 245 "Calls" on the Monday morning selloff.
Shown above is an 11:30 a.m. chart. Now that it's down over four dollars in one day can we expect a rebound? As the hours dragged on in the afternoon the stock stayed pretty flat. Nobody knew why this happened. Now it is Tuesday. Would this be a good time to catch a rebound, this being day two in the week? Look at yet another drop on the opening? Yes, it could be a good time however at such a moment when your buying into options on a falling stock it's sometimes best to pick with an option with an extra week of "time value" built into them. Here now is what I did.
This series of "Call" options at this particular time look attractive.
The above quotes show the "240" series that expire this week while my fill is on a next week out 240 "Call" option position.
This next chart shows a rebound kicking in.
. I used this rebound to get out and all of this happened in just over an hour.
Did I sell out too early? Not really, here is how it ended up closing out the day.

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