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Midweek Trading - The Week Following an 878 Point One Day Drop Last Friday

The markets are shrugging off last week's big drop on Friday. As of late the markets have always seemed to have come back up again. Now a snapshot view of three different companies at lunch time on Wednesday. All are in strong upticks. Fighting strong stocks is a recipe for failure. It will be interesting to see what happens. 1) Trumph is busy changing the prices on drugs and other things. Most stocks in this sector have rallied over the last week or two. Only six contracts of Puts traded in the first half of the day on the "at-the-money" options on a morning the stock has jumped upwards almost fifteen dollars. There is a reason for this small number. Given the recent volatity of the markets in the last three or four sessions, traders are less willing to dabble in Put positions on individual stocks trading in uptrends. Caterpillar for example such a stock. It's up $42.00 in three days and traders are afraid to play it on the downside. 2) Walmart. What do you think i...
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The Trade Of The Year On Caterpillar Calls. It's No Surprise It Happened On A Friday

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 Caterpillar and Boeing struggled on the week and option trading volumes dried up. My attitude was not to trade, to wait for better days. I should have known better, the system is a little bit corrupt. Insiders could gain the most from a late Thursday release of good news. A one day pop in the next days options. That is what happened. On Friday the D.J.I. was up over 700 points. The one day options on Caterpillar were star performers. It was the "trade-of-the-year" on Caterpillar Calls. It doesn't look like any of the 100,000 or whatever the number of brokers and analysis there are out were clued into this action. So strange. * Also think about this. Caterpillar has something like 109,100 employees. I don't understand why there isn't more traders in on this action.

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