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This One Is Too Nervous To Watch. Pfizer

This is a short blog full of twists. Try to get through it. First a five day chart of Pfizer. chart. In the past week it was up $1.05 and it was the 7th most activity traded stock on the NYSE most active list. It's in a breakout mode. Look at how it traded over the last three years. This breakout mode might last a few days, weeks or months. This stock has a history of moving somewhat slower than most stocks. A second quarter earnings report comes out July 30th. If it's good that could add a touch to the stock's price. Now this. As a general rule stocks and options on stocks in this particular price range are difficult to play and in this case everyone is following the same story. Fred down the street and John around the corner and Mark across town are all dialed into the same commentary. There is nothing that really gives you an edge when it comes to playing it. That's the problem. Here now is a look at the Pfizer "next-week-out" $30.00 series of Call optio
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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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