What To Focus On - Part Two

My blog of November 27th was entitled "What to Focus On". Please read it. This week we are feeling a bit of a hangover. Last's weeks triple witching event is over. Stocks that were forced to contract in price to sqeeze out spectatate positions on them are now free to resume there old trading patterns. This Monday morning at 10:20 a.m. the Djia is up 301 points. There are also losers. So now what? Mark on your calendar exactly three months down the road how the markets traded on the first morning after one of these triple witching events and use this same logic to catch the upside on the next "hangeover" day like this. How do you pick the winners? Find a few stocks that have enjoyed a recent upswing and play them to pop on the first trading session after one of these events. This blog is just an observation.

Deere and Boeing, The Second Day In A Row With A 500 Point Day Decline

In this market environment playing the market has become for some traders an hour to hour exercise. Many investors shy away from this method of trading and consider it to be a fool's game. Yet at times opportunities present themselves that are just to good to ignore. First, here is how the markets closed out the day followed by where the DJI index was at at 1:30 p.m. this afternoon.
It got ugly quickly in the early afternoon. Here are a look at Deere and Boeing at that time.
Now for some afternoon Deere "Put" quotes. Deere spent most of the morning in the 398-399 range at which time the 400 series of Puts that were to expire that day traded down to $2.00 a contract. Can you see that?
Here is how this series of options closed on the day. Note the price swing in the day from an interday low of $200.00 per contract up to a high of $1,057.00 per contract.
This you might say was a one time blip. Yet what's going to happen to Put options on a stock in the $400.00 range just prior to the markets losing hundreds of points in the matter of two hours? It's not rocket scientist stuff. It actually happens and I am amazed that more traders are not tuned into this stuff. It's the leverage you get with options that have an expiry date only a few hours away. Yes it's high risk but when the bottom falls out of things like it did today the downward action is often swift, directional and decisive. It's like watching a train reck about to happen. The Boeing story today was much the same. Here is it's one day chart and a look at the action in the Puts. Notice that the 220 Puts were trading for $.50 going into the lunch hour. Look at how high they traded up to. One slice of the action here shows them going from $2.15 per contractto $6.30 per contract in only 26 minutes. Look at the chart below.
Look at the open interest and volumes of contracts traded today in this series of Puts. Boeing always has a large following. Option traders playing the downside watched the carnage happening all around them with glee and were able to make out big time on this one. **** to read yesterday's blog on Deere on the previous day scroll up to the top left icon.


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