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What To Focus On - Part Two

My blog of November 27th was entitled "What to Focus On". Please read it. This week we are feeling a bit of a hangover. Last's weeks triple witching event is over. Stocks that were forced to contract in price to sqeeze out spectatate positions on them are now free to resume there old trading patterns. This Monday morning at 10:20 a.m. the Djia is up 301 points. There are also losers. So now what? Mark on your calendar exactly three months down the road how the markets traded on the first morning after one of these triple witching events and use this same logic to catch the upside on the next "hangeover" day like this. How do you pick the winners? Find a few stocks that have enjoyed a recent upswing and play them to pop on the first trading session after one of these events. This blog is just an observation.

Caterpillar Calls. Our last Blog Was About Caterpillars Calls A Week Ago Last Friday. Here We Are Now Talking About The Same Thing.

The open interest numbers in Caterpillar Calls last week was negligible. Here is a look at the Caterpillar 237.5O Calls at 12:14 P.M. a week ago Friday. Look at the open interest number. It's next to nothing.
Now here is a look at one series of Caterpillar calls, this time the 250 Calls at 11:53 A.M. last Friday Nov 17th. They were up over 300% in that morning's trading action and the stock was up $16.00 in one week! What I find so strange is that so few traders were using Call options to catch this strong directional move. The surge in the stocks price was afterall one of the largest "one week" surges this year. All of the short term, mid term and long term Call options exploded upwards in price. Here is a look at the Caterpillar 250 Calls at 11:23 a.m. which where to expire that same day. Yes the open interest numbers were up a touch however they were still next to nothing.
Here now is a five day look at it's trading.
Now a 30 day look at this stock.
So why once again are so few option traders playing them? Why not just focus on this one stock? It baffles me. Things to ponder. 1) In 2022 Caterpillar had 109,100 employees. Why wouldn't at least 200 or 500 hundred of them watch the option market on their companies stock and jump in and use Calls and Puts as trading vehicles at times like this when the stock is hot? 2) Rebuilding the damages caused by wars and global warming. Caterpillar has to be there. Goverments will find the money needed to rebuild all that is destroyed. 3) The short position in Caterpillar. It's somewhere around 1.3% of the float or the short interest ratio / days to cover is 2.5 days. That's nothing. When this stock decides to move up for whatever reason there is nothing really to hold it back. Boeing jumped a chunk today on an analyst upgrade. Analysts are more prone to do that in good markets. If Caterpillar could jump 15 of 20 dollars why can't Boeing? That's logical thinking.
$270 from $204. Announcements of $220 from $204 are more the norm. Deere is yet another stock to watch for price swings. Options that expire in 30 days seem to be best to play in markets like this.

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