CAT Puts

First the year to date chart followed by it's one week chart. It's Friday morning in the premarkets and which way are the 13.50 series of Calls going to trade on the day? Let's look at how the option traders have set themselves up going into the opening markets. First, let's look at the price on yesterdays closing of the 13.5 Puts and the number of open contracts. There are 32,193 13.50 Puts outstanding and they cost seven dollars a contract. Ford closed Friday at 13.58 which is eight cents higher that the 13.5 striking price. To break even on these Puts the stock has to close at 13.43. If it closes lower than that your profits start to kick in. The stock is up one dollar in the last few days and it sputtered around yesterday and didn't do anything so it is conceivable it might give up some of it's recent gain. But wait. Imagine the stock opening ten cents lower, let's say it opens at 13.48 on a nervous opening. If that were to happen the Puts would open ...

In a past blog Caterpillar averted a strike and it was noted that the stock jumped to the moon on that news. Caterpillar has a large following and likes good news-made in America stories. Biden avoided his government running out of money late Thursday and on Friday the stock Caterpillar jumped to the moon. It opened higher and kept going up.There is no looking back now at what happened. My May 29th blog talked about how Caterpillar had slight bounce last Friday morning and the light volume of option trading on it. With the stock going sideways to down all that week playing Call options on it was out of fashion. Things changed on Friday June 2nd. Caterpillar bounced. So here now is a look at how two "out-of-the-money" series of Call options traded on it on Friday. Look at the open interest numbers going into Friday. Two hundred and ninety five contracts. Few traders were expecting the news to come when it did. This blog could now go in many directions. Last week both C...

A recent past blog highlighted the fact that the volume in Toyota options is super light. Now read this. There was a change of leadership. Sales are up, the stock is down. They now have the second, third and fourth best selling cars in the world. It was just reported April global sales were up. Here is the trading in two "in-the-money" Call options that expire in two weeks (The trading on May30th and on May31st). Now May 31st. Here is the chart. This is all so strange. Only one Call option traded in two trading days. One! I must be an odd duck writing about this or missing something. Production levels up with top selling brands which equates to economies of scale. A proven product with a good reputation. A stock off in price two days in a row in a soft market. Any kind of a reversal would send these Calls up 50% in one day. At this point in time the higher up 140 Calls with two weeks to go would also surge on a two dollar reversal. That would cause an instant double. I...