Featured

The Dow Up 457 And the Nasdaq Up 460.70

Look at these gains today. Today is a Thursday. Meta is up $18.04, AMD is up $17.49, NVDA is up 110.55, AMZN is up $6.00, ELI lILLY is up 23.75, SUPER MICRO is up $241.52, NETFLIX is up $15.12, COSTCO is up $11.38 AND MODERNA is up $11.85. Gains of $110.55 and $241.52 in one day on two stocks! What's that all about? Well warning bells should be going off. We must be at a short term top. Three stocks stand out to me that are having changing stories. 1) Moderna. 2) Rivian. 3) Lucid In these crazy markets a lot of these stories get buried. Option players in these markets are getting whipsawed and it is getting to be to difficult a market to play in. Once this final round of earning reports are over things should get back to normal.

An Example of Call Options on Caterpillar Prior to an Earnings Release

Not all retail option traders are up to the challenge. What am I talking about? Caterpillar Calls just before an earnings release.This is a blogging site about Caterpillar Calls and Caterpillar Puts. The stock could have a huge jump if the earnings beat expectations or investors could be worried a recession looms. Look at both Caterpillars thirty day and five day charts.
Now look at what the 262.50 Calls are priced at which expire at the end of the week (August 4th).
Very few option traders are playing them. Normal in my opinion should be over 1,000 contracts in a series like this trading everyday and a few thousand open interest contracts. With global warming more heavy equipment will always be needed to rebuild our roads and bridges getting washed away by floods. That plus Caterpillar recently come to terms on their contract talks and supply chain issues are getting better. Did you see how Boeing jumped in price on it's earning report a few days back? Caterpillar could jump too. Here is Boeing's chart in reaction to thier earnings report.
These 262.50 Calls cost about $500.00 a contract to purchase which is to rich for many option players to buy into. I get that. I also understand that the stock is already up over $20.00 in the last month so some shareholders may be thinking of selling out on the release of good news. Looking at Boeing once again look at the open interest on it's slightly "out-of-the money" Calls that are to expire in five trading days.That to me is a normal volume of trading.
Why is there so much caution in the air? One reason is that if Caterpillar jumped five dollars on good news that wouldn't move the needle on it's Call options all that much. Maybe a 50 or 60% gain. Built into the options price is five days of time value which makes them somewhat expensive. What do I expect? I expect a gain. **August 1st. Here is their earnings report.
Let's check back in a day or two to see how the needle moved on this stock. It jumped. The 262.50 Calls well up over 400%.
Wow. It was a crazy gain. PART TWO Let's go on a few days to see what is happening.
Now here is how it finished the week.
Timing was everything.

Comments

Popular posts from this blog

Boeing Down $20.00 or 8.03% On A Monday Morning

The Three Amigos On A Friday

Boeing. Trouble Where Trouble Shouldn't Be.