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Caterpillar Calls Rock

They keep going up. Yet this morning, a Monday morning the DJIA is down. Can you fight a strong stock or are you just throwing money into the wind? Deere, Caterpillar and Boeing are all also on an upward terror. Now a look at these Caterpillar Puts at 10:41 a.m. which expire at the end of the week. The open interest in this series of Puts going into todays trading session is zero. What about the action in the Calls. Are option traders playing them? Well yes and no. The 630 series of Calls have almost doubled on in price on the day but the volume of trading in them is not all that inspiring. Now let's go back and look again at the 642.50 we looked at back at 10:41 a.m..Here is how they closed out the day. The D.J.I.A. index never came back. Shown above is Caterpillar's one and five day chart. Is this "step-up" chart formation suddenly starting to crumble? That's the question. Tomorrow openings will likely see Caterpillar up or down $5.00. Maybe this time, ...
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Harley-Davidson

First, I am not a big fan of playing options on stocks in the thirty and forty dollar range. It's not like speculating in Boeing or Caterpillar Calls and Puts with these stocks swinging up or down two or three dollars nearly everyday. Harley Davidson is a thirty five dollar stock. Look at how it is trading so poorly on the good earnings news back at the end of April.
Now here is some of this news.
All the good news was wiped out by the forecasting of a bit of a slowdown in the second half of this year. Investors who bought in early this year when the stock was trading over fifteen dollars higher who correctly anticipcated this surge of earnings must now feel so frustrated. Where are their rewards? Now look below and see where the January 37 Calls are trading at. If the stock gets above forty you would be in luck. That would buy you their next two earnings reports. By then management might see their business in a more favourable light. Yet the chart looks ugly and there doesn't seem to be a support level.* With most option positions "time value" works against you. When you purchase eight months of time and your reasonings for buying in turn out to be correct the time value can become your friend. It is however still a scary position to be considering.

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