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Waiting For A Drop On The Opening On Bad News

Here is the bad news. The company is Eli Lilly. How bad is this news? Well look at it trading in the premarkets. So what do I think? I think the news is a setback of sorts, but not really all that bad. The stock is going to open lower, that's a given. It's like trying to play Boeing after an announcement that an airplane has crashed. So the stock is going to crash and it might have a small rebound and then it's going to slide down some more. A test of sorts will happen sometime in the afternoon. It might stock falling but then where will it go from there? The best case scenario is a recognition that investors got it all wrong and the stock ends up flat on the day. Yet there might be more of a downward dumping of the stock on the close followed by a selloff on tomorrows opening. Should option players be jumping in to play the upside on next week's Calls? That is the question. Here is a look at Boeing on the days after a crash. Day two after the crash was equally as ...
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Watch Boeing Jump On News

First some news as the markets opened. Horwmet Aerospace offered this sobering news.
Then good old Joe made this statement.
Now the opening chart.
When I see opening charts like this I always want to play it in the opposite direction. What was my take on all of this news. New contracts are great, people are flying again and ticket prices are up. It's all good but Boeing doesn't really need more deals and orders. They are still trying to get back on track. Would this morning bounce go away? I thought so, I jumped in on Puts.
In at 9:45 a.m., 9:48 a.m. and 9:50 a.m. . I was confident in what I was doing but the stock seemed to stay persistently high.
Then I got frustrated with how it was trading and bailed out.
I sold all four contracts at 10:42 a.m. at $2.61 per contract so I only made a touch. I was in this position for just under an hour and was starting to worry about a second wave of buying coming into this position.
This chart above illustrates how they jumped higher in price after I got out and the chart below shows how Boeing traded on the day.
In hindsight these Puts reached a high of $3.70 at 11:50 a.m. I also did a short chase of Boeing as it rebounded but once again didn't have the patience to stay with it. Here is what I did.
In at 11:51 a.m at $375.00 and out at 12:29 at $430.00. a period of time of 38 minutes. I left good money on the table. I went on to successfully trade Visa on the downside and got out of that position 3:59:21 p.m. The DJIA closed down 156 points on the day. Visa released this news after the markets opened this morning. It sounds ambitious but seems a touch risky.
* see my most recent blogs about playing Visa.

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