The Temptation of Buying A One Day Call On Thursday Afternoon.

It's usually better to wait until Friday morning and then deciding which way the markets might go. They can however on Thursday afternoon be tempting. Thursday was a trick with Boeing only up $.02 cents on the day. Here is it's one day chart. Playing it from (9:30 a.m. until 11:00 a.m.) was the way to go. On Wednesday we referenced Boeing looking like it's old self again. Now look at this. Focus on the chart from 1:00 p.m. unti 2:30 p.m. That period of time could have got Call option players excited. Experience also tells us that the 2:30 p.m. - 4:00 p.m. period of time is one of most dangerous times of the week to be looking at Call options that expire the next day. Now here is it's full one day chart. From 2:30 p.m. until 4:00 p.m. it really did nothing, with no indication of would happen on the following morning. Do your own homework to see if you concur with this logic. Now Friday morning and the one day options that expire at 3:00 p.m. this afternoon. Only 355

Deere - Earnings Are Coming Out.

Deere's earning report come out Thursday Feb 15th which means tomorrow's trading (which is Wednesday February 14th) will be the last day of trading before the release of their earnings. The DJI dropped 525 points today Tuesday Feb. 13th. That hasn't happened very often in the recent past. Here is how Deere traded on that day. Anyone thinking of buying Deere Calls prior to it's quarterly earnings report where handed a great opportunity to get it. It was if you opted to get in during the day of this big fall and out the very next day (which was the day prior to it's earning report being released). The stock regained about half of it's one day loss. Yet that really isn't what I am trying to focus on.
Is Deere now skating on thin ice? Let's now back up three months to check out the mood during it's last quarterly report.
Here is how the stock traded on the day that quarterly earnings report was published.
On a different note three months ago Caterpillar offered guidance going forward. It was good. Here it is. Guidance like this helps tips the scale in favor of purchasing Calls.
Now let's look at how Deere has performed over the last year.
It has done nothing. So the bottom line really is that with all of the overhanging doom and gloom it's best just to stay away from trying to play Thursday's earning report which is being reported before the opening bell. The stock now on Wednesday's closing was at $378 which is higher than it was three months ago when this guidance was offered. As stated, "The company is predicting sales declines". Why take a chance on trying to play the upside? In situations where the odds are somewhat unknown its best just to stay clear of the action. If it does pop after their earnings come out and you missed it, that's just the way it is. If it does drop on the release of their earning report an entire new game begins. It is the game of playing it for a rebound. A few blogs back I talked about a rebound on McDonalds after it's disappointing earnings report was released. A rebound happened quickly and I pointed out a subsequent "one-day" very clean and profitable rebounding trade. It is afterall McDonalds and people are always going to want to eat there. Rebounds on heavy equipment manufactureres after poor earning reports are a different story and rebounds, if any might take a longer to happen. Let's keep on following this action. At Thursday 12:20 p.m. update after the earnings report was released that morning just prior to the opening bell. .
Can you see how the stock is now in "no-mans-land" meaning playing it makes no real sense? That's really not a space option traders want to be in. Yet then again when your thinking's start to like this chart formation it could be the best of times to make a counterintuitive decision. Now here is how it closed the day.
Now to comment on playing the upside. Here are the 365 and 370 Calls which expire a week Friday. Is the shakeout over? Look at this. Look at the closing "open interest" numbers.
Nobody it seems wants to be holding them. It's a massive gamble! Could a second dip happen tomorrow which is a Friday? One way to find out would perhaps be to look at the 365 Puts that once again, expire a week Friday. Here they are.
That really doesn't work as a guide. The volume is too light to make any meaningful assumptions. Now one more look at a very special situation. The Deere Calls which expire tomorrow, the day after this $20.00 one day drop. Will they show any signs of a rebound? The street doesn't seem think so. Is the street going to be right? Look at the open interest in these "near-to-the-money" Calls. Nobody is playing them.
There is actually more interest in playing the Puts further down.
Now to add some more color to this blog. Look at how Deere reacted to an earnings report last May 20th. Up and down. It's easy to get burnt playing Deere earning reports. Stay away or study them more with reverance. It's your call!
Now for a final Friday 11:38 a.m. update.
The Puts win again big time. If stuff like this you have to know to be successful in option trading. ** When bad news piles up it really piles up.


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