Featured

The Sliding Door Syndrome - Hertz

 Open the door and guess what might happen? Who knows which way the winds will be blowing. The used auto car market got dumped on last week in the U.S, especially on tariffs new.  Trump said he might raise the tariffs on cars to more than 25%. It's a fickled  market. Here are a few of the sell offs. 1) Carvana Company. It sold off over $21.00 dollars on the day last Friday. They have a reputation for having share manipulations with a long history of  insider "buying-and selling-activities". They have a short interest of 5.3% . It didn't help much that the DJIA was down over 700 points on Friday. 2} Carmax also sold off on the week. They have an earnings report coming out and that could cause the stock to drop but maybe not. It could actually rally. Here is it's one week chart and a conference call dial in number. Listen to it if you like. I might be. Now here is a look at the 65 series of Calls on this stock that expire this coming Friday.  On Friday morning at ...
Post a Comment

Caterpillar Puts - A Strange Twist Of Trading.

One day options that expire the next day? Crazy, stupid, nuts you might say. It's like playing chess with the computer. You never win. Hear me out. Knowledge can come from the craziest of places. I like trading options on Caterpillar because when it starts to swing, it can move quickly. It's also a stock void of random new releases. That's one of it's good qualities from a trading perspective. In contrast, random new releases mean that you're subject to the wind of changes for unexpected reasons. The stock Ford for example has random news releases about a thousand little situations happening almost every other day. If you read my last blog you will see that a few days ago that Caterpillar went up six dollars and then down seven dollars in a two hours period of time late in it's afternoon trading session. Many stock traders are now migrating into becoming "stock/option" traders and the demand to learn more about how to trade options is now going through the roof. Yet the path forward in learning is filled with trickery. The stuff that I write about is not going to be enough to be your guide to success. My approach is like a surfer with no fear or some would say no brain, looking for the biggest new wave to ride. My blog on Elli Lilly earlier this week talked about doing a two-or-three hour trade on playing the downside on it's huge just announced earning's pop. How stupid is it to write a blog about that? I know that but part of my journey in writing all of this stuff is to show how limitless these opportunities are. So here I am talking about Caterpillar again. This time I want to talk about what happened to it yesterday. Did I play it and did I make any money? No. I deemed it to be to dangerous. Why? Well early into the opening session the indexes were way up. I didn't want to add that new risk to my methodology of trading.
That was totally unexpected. How was Caterpillar doing? Up like five dollars? No. It was actually down like seventy five cents when I was checking it.
So what next? I like looking at Caterpillar Puts about an hour into the trading session with thoughts of catching a slide down. Yet here is the thing. With the market up over 500 points and with Caterpillar stuck in the mud, wouldn't there be the chance that Caterpillar would get dragged up in price as the day progressed? Stay away right? Here is what ended up happening. Here is a one day chart of how Caterpillar ended up trading.
It did get dragged up in the first twenty minutes of trading and then it decided to ignore what the rest of the indexes were doing. Here is what happened with the 337.50 Put series. That's where some of the action was.
Around 9:50 a.m. they traded down to as low as $.35 cents a contract (or $35.00 to purchase one contract plus commissions) and then around 11:00 a.m. they rebounded to $ 2.71 or $275.00. Notice only 136 contracts traded on the day. An opportunity missed? Perhaps. Do you now understand why I find all of this so fascinating? Yes I am a little fish swimming in a sea of sharks. That's the scary part.

Comments

Post a Comment

Popular posts from this blog

Living on Kraft Dinner?

Image
What does the word disconnect mean? As a verb it means "to sever or interrupt the connection of or between; detach". Option trading - one day options - is a disconnect from the world. What happens to slightly "out-of-the-money" Call options on Costco when the stock shoot up thirty dollars on the day? I will show you what happened on Friday to Costco Calls and the options on a few other stocks I frequently watch. What a disconnect from the real world. But before that a look at how the indexes traded. 1) Costco. It's five day chart and a look at how three of it's option series moved upwards in one day. You may not know how to read these printouts but try to read the highs and lows on these option pricings. One printout shows an "at-the-money" option which means you are buying a contract on the stock, good for one day only at a locked in price equal to (or very close to) what the stock is currently trading at. The other two contracts shown are ...
Read more

The Little Engine That Could

Image
Walmart again. It's all I seem to blog about. Here is it's five day chart. The stock keeps going up and the option series are set up in one dollar spreads. Even a fifty cent move on the stock moves the needle on these Calls. Look at how this series of Calls was trading yesterday at 3:00 p.m.. Now here is this same series of Calls just before noon today. Thirty days of upward action like this punctuated by the off day of decline. Now notice the higher volume of trading in the series of Calls with the higher striking price. These are the ones's with more leverage. At the same time look at the five day chart on Costco. The two stocks sometimes trade in tandem. Humpty dumpty sat on a wall .... a had a great fall. Someday soon a fall might happen but what a great ride it has been.
Read more

A Fireside Chat - One Year Options and Thirty Day Options. Which is Better?

Image
Some say to think small, not big. Trying to play Disney options is thinking big. It is a stock slighty out of favor. If we start with it's a three year chart, we will see it is down by about 50% over that period of time. Now it's one year chart. If the stock can break 110 in early 2024 the sky is the limit. It does have a lot of moving parts so anything could happen. Look at these Calls options one year out. One year in options buys a lot of time.They look reasonable. If the stock ever inched up to the $105.00 price level in the three or four months these options would jump up in price by about 50%. Even more if they had really good news. Yet it's the "what-if" aspect of the equation that castes such a trade in doubt. "What if" stories just don't cut it. There are to many variables in play. Then again, why are we even thinking of long-term Call options after a December's rally? Let's switch gears. If consumers are out spending for X-mas...
Read more