Featured

CarMax Puts?

 Here is the number. Call in to listen to their just released quarterly report. You won't have to talk to anyone. It is 800-839-1247. In about five days this link will disappear. Please listen to it. I listened to all of it once and to the first half of it two times. What I learned is that their retail car sales on the quarter compared to the same quarter a year were up 6%. They purchased 336.000 vehicles from the public, up 7% and 48.000 from dealers up 38%. Their average retail sale price was $26,100, down $400.00 per vehicle from last year. They doubled their share buy back program. AI technologies are now helping them operate more efficiently. Everything seems positive. But wait, we are talking about  the used car business and what could happen if consumer confidence suddenly starts to wain? Look at it's three year chart. It now sees to be hitting a rough patch.  Now a one month chart.  All of this talk about tariffs and what level of tariffs will be imposed on n...
Post a Comment

Deere and Caterpillar End of the Week Profit Taking

Thirty five minutes into the trading action and here is what is happening.
Trump is big on tariffs and is vocal on Deere products made in Mexico.The 410 series of Puts on it are up 367%.
The 405 puts are up 920%. They closed the previous day at .51 cents.
Volumes of trading are light. Traders are not taught to trade in one day options and for all the hype about Ai trading no inroads have being made in this regard which is something I find strange. What value has Trump added to these two stocks this week? None really. So why such extreme forward looking thinkings? It's 10:28 a.m. so we are still in the first hour of trading. These options expire at 3:30 p.m. so there is still four hours of trading life in them and the Djia is up 239 points.
Is it now time to catch a rebound? Maybe. Well maybe only to those traders who caught the selloff and profited this morning. Yet then again one would be fighting thinnly traded Calls and Puts both on the buy side and on the sell side. In other words you would have to buy something a little bit closer to the asking price and sell a little bit closer to the bid side. It would have to take like a three dollar price swing in the right direction before you would be able to profit from such a move. We are not in ordinary markets so where might a new wave of optimism come from.? Look at how these two Call option series are trading a few minutes later at 10:27 a.m. First the stock Deere and one series of it's Call options.
Now Caterpillar one day Calls.
Now here is the end of the day chart on Deere and a look at the 410 Puts.The stock dropped another five dollars from where it was trading at when we looked at it this morning.
They are up 581%. (The 400 series of Deere Calls we considered at at 10:27 a.m. are now toast). It's hard to believe that it could drop $17.10 on the day. Now a look at how Caterpillar traded on the day. It closed down $14.86.
Here is a look at how one of it's series of Puts traded on the day. This time it's the 400 series of Puts which were about ten dollars "out-of-the-money" going into todays action. Catching action this extreme is admittedly very difficult to do.
These Put options were up over 1,000%. How do think Deere and Caterpillar did on the following week which ended on Friday November 15th? First Deere.It was down $4.29 on a week when the Dow dropped 1.2%.
Now Caterpillar.
It lost $9.30 0n the week. Now a 30 day look at Caterpillar.
His tariffs might cause reciptocating tariffs and might slow consumer spendings. The long term effects of tariffs are still being debated. Now that x-mas is coming most traders with a mid term horizon are going to sit back and wait for a better thesis to emerge in the new year.

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