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Novonordisk

It crashed hard. Yet another chapter in it's story. It's not a company that is going to go away. They have sales in the billions of dollars. When the dust settles the stock might gain back what it has just lost. Would I be rushing in to play the upside. No. It looks like Eli Lilly fell in sympathy. Can you play Eli Lilly for a bounce back up? Look at it's chart. It's wild. Here is it's thirty day chart. Knowing that Novonordisk crashed yesterday and knowing that Eli Lilly took a slight hit also creates an opportunity. Novonordish woes are not Eli Lilly woes. Here is how Eli Lilly is trading in the premarkets this morning. It's up ten dollars. Options can be used as a vehicle to make money on causal relationships. Now for one caveat. Playing options on stocks in the $700.00 price range is next to impossible. Why? Well the premiums are crazy expensive. Here is an example of how one series of it's the Calls is traded on the opening. When you have to she...
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Boeing and Caterpillar

These blogs are starting to get repetitive. Blogs about Boeing and Caterpillar rising after Monday's meltdown. The DJIA was up today over 500 points and here is how these two companies did.
Look at the extremely light volume in both of these two Call option series. What does this tell us? Two things. It tells us about the sophistication level of today's traders. Getting in on a Thursday looking for a one day bounce is not a smart way to trade. Secondly, these are both "in-the-money" postions and the best percentage kicks happen with near-to-the-money options. Let me show you the swings on the 195.00 and 197.50 Caterpillar Calls today. Both were up over 200%.
In both of these series the volume of trading exceeded the open interest levels. Out-of-the money postions in near term expiring Calls is where the action is on days that enjoy 500 point rallies.

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