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Tesla - One Day Options. Not Your Typical Read

This blog is going to be a tough read because it tries to track Tesla's early morning option trading in the last day of trading in the October 18th 220 series of Tesla Calls. Critics of "one day" options are having a hayday in pointing out these "one-day-to expiring" options are a mockery to concept of sound financial investing. Here is Tesla's premarket trading price in the 220 series of Calls at 9:29 a.m. on Friday Oct. 18th. They are flat. Remember last Friday was an exceptional day for the Tesla stock with it being hit with a $21.14 drop on the day. Do today's traders remember this? Probably not. Why should they? It's a given this stock can be volatile. Option traders playing the downside last Friday on Telsa made out like bandits. Now it's 9:31 a.m.reading. Up only eleven cents. Option traders are in a period of time where they have to deal with early morning trading jitters. Is there a glimmer of hope that this stock might bounce up one
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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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