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Caterpillar Drops $60.00 In Five Days - Noon On A Wednesday

In past blogs I have mentioned how light the volume of trading is in Caterpillar options. Trading them is a challenge. Deere options are also like this. Caterpillar can and does (in recent times) swing $10.00 on any given day. It is noon on a Wednesday and this the one day of the week where you can look for reversals on "one-week" options expiring on Friday. I have talked about this many times before. Here are it's five and one day charts. Now a look at two of it's Call option series. The 560 series actually offer excellent value given how large it's morning drop was. Who cares to check the news on it? When it drops this much this quickly the bad news, if any, is already baked into the equastion. Now the second series of Call options I am showing you are $44.00 "out-of-the-money" and expire in 2.5 days. "Out-of-the-money" Calls to this extreme are a speciailty item. In layman's terms they are a longshots. They can be excellent trading veh...
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Disappointment on The Opening - Caterpillar Earnings Report

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Caterpillar's earnings report. What I see is 4th quarter sales up 23%. Strong 4th quarter earnings of $3.71 per share.That's a solid number. Just think, the supply chain issue isn't being used as a mistake. Now look at the the opening options market. The stock is down on the news. Management made a few remarks about near term headwinds. They do that sometimes to temper growth expectations. These two quotes are the 205 Call series which expire today. One is at 9:44 a.m. and one is at 10:03 a.m.. They would be very dangerous to consider purchasing since its very unlikely that they could ever shake off this downward spike so early in the morning. So now what? It's at this time in the morning when the decision to reacte to this bad news gets tricky. The stock is down like ten dollars and the DJI is having a good day. There is a strong tempation to jump in on the upside hoping for a quick reversal. That's one of the things that makes option trading so difficult. One...
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