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Bad News On Caterpillar Going Into a Friday.

Here is how the stock traded on a Thursday.There was nothing unusual about the day. I am suprised they would dump this news on the market going into a Friday trading session. It messes up option traders. Doing this type of an announcement on a Tuesday prior to the markets opening would be a less disruptive day to do this. Here is the news. In a way this wasn't totally unexpected news. As they said, there were several other recent updates on this issue. Auto companies in their recent quarterly reports were harping on this issue. Look at how it dropped in price in the after market trading. Now here is how one series of Puts closed the day. Look at how this news totally caught the markets by suprise. The secrecy of this news is a credit to Caterpillar. If Caterpillar had this news are Deere Call holders going to get worried? Here is what happened on Friday morning. Now Deere which is now also trying to shake off this bad news. These two stocks tend to trade in similiar ways. He...
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Boeing Is A Strange Animal

Last week I got caught in the mud following Boeing all week. It basically went sideways and ended up being the 17th most activity traded stock on the NYSE "Most Active List" by dollar volume and up .27 cents on the week. The Dow rose only 3 points on the week. Here now is how the Boeing 170 Call options started this week, twenty minutes into the trading action.
Here now on Wednesday April 24th is a look at it's most recent five day chart.
So here is the thing. The 170 Calls closed Tuesday (yesterday) at $4.75 with the "open interest" numbers going up.
Yes the stock has swings but who wants to shell out that much money for an "out-of-the-money" Call option with only three days trading life left in them? Compare this to my last blog on Lowe's where the chart screamed the stock was going up. I am including that chart again. Yesterday as shown in the chart the stock went up and the option series I illustrated doubled in one day.
Now this. Why are the Call premiums so expensive? Well the answer is that Boeing has an earnings report coming out before the markets open this morning. Call option players were paying a touch of a premium for the right to be participating in this action. My initial comments about being frustrated with the high cost of these options totally ignored this reality. Now this report.
Slowing down production to improve quality. That's a damage control statement which helps to pacify the relentless criticism they have had to contend with as of late. All that said, here is how the Call options are trading shortly after the opening today.
It will be interesting to observe at the end of the day if the "open interest" numbers subside. To be continued. Now here they are as of 11:25 a.m.
Now look at the end of the day chart and how the markets closed.
Now look at how the 170 Calls closed the day.
$4.75 to $8.05 to $.38 cents. What to make of all this? Let's back up for a second. Last week I posted a blog on April 15th which followed the 170 Boeing Calls for the week. During that week the 170 Calls closed at $2.70 on Monday, $2.80 on Tuesday, $1.95 on Wednesday, $1.45 on Thursday and $.10 cents on Friday with Boeing closing the week at $169.82 on Friday. So much for the strategy of purchasing Call options which expire slightly in advance of earning releases. Why did Boeing rally on the opening today? Pent up optimism gone array? Store this blog away somewhere in your mind. Tomorrow Caterpillar has their quarterly earning report coming out.The next morning. Caterpillar got smashed,see my next blog. Boeing went down again in sympathy.

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