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Snowflake Part Two : Thursday Overnight Position Going Into The Final Day Of An Options Life Are Not My Cup Of Tea Unless It Is Perhaps Tesla

The 172.50 series of options on this stock will expire tomorrrow. Today is a Thursday. The first printout shows a bit of a struggle on the opening in the first nine minutes of trading and a return to price it closed at in the previous session. (It did have a nice rally on the previous day then to only give it up). Could it rally again this morning? Now the second printout below the following paragraph shows the high volume of trading pouring into this series of Calls just after the opening. These high volumes of trading shown below happened in the five minutes and twenty one seconds of the trading session. Traders bought in on a slight dip looking for a reversal. Good for them. Are these traders hoping to be out at a profit in the next fifteen or thirty minutes? Yes. Get in and get out. Catch a profit as the stock is deciding which way it will go. It's early in the morning trading session and the volume of trading is always the highest in the first and in the last hour of trading....

Caterpillar Calls. A Classic Trading Situation.

Early indications were that the markets were set to rally on Tuesday March 29th. Most of the stocks that is except for Caterpillar. I scurried around looking for news as to why Caterpillar was trading lower in the premarkets but couldn't find anything. Caterpillar, in spite of it's size often seems to trade in a bubble. It's movements up and down seem so random. Institutional shareholders move huge blocks of stock in very selective ways. Within only a few minutes of trading the markets were up strongly but Caterpillar was going in the opposite direction. When you look at it's opening chart below one would have to ask themselves if there would be any support at the $219.00 dollar price level. It's the falling knife syndrome. If you're looking for a reversal when do you buy in? With the markets so strong one would think it's only a matter of time before the stock stops falling.
Well look at the volume of trading on the 220 Caterpillar Call series (that expire this Friday) one minute into the trading session.
Now look where the stock traded down to at 10:00 a.m.
How did the Call options trade on it? Well first notice on the upper printout at 9:31 a.m.. At that time only two option contracts had traded on it. This tells us is that the interest in premarket trading was very low or next to nothing. That's somewhat suprising. In the absence of bad news, no one is really interested in trying to estimate how bad this news could be. Now let us look at how the stock continued to drop, showing the 220 Calls at 9:58 a.m. and then also earlier at 9:31 a.m.. Imagine the stock being down like $4.58 when then D.J.I was up over 300 points. But wait. Stocks do sometimes turn around. Look at the one day chart below on Catipillar showing how it ended up trading on the day and look at how the 217.50 and 220 Call series ended up closing ot the day.
Good money was made by option traders who timed their trading wisely.It wasn't a short term trade. It was four or five hour trade. We also note that Caterpillar continued to jump upwards the following morning.
I call it "A Classic Trading Situation" because Catipillar is known to trade upwards and downwards on no real news. All of this action never ends.

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