Featured

A Jumpy Week For Caterpillar - A Week With Earning Reports

Here is Thursday's trading on the day on Caterpillar. Here is how the $417.50 calls that expire tomorrow closed the day. Something happened this week. Caterpillar had a quarterly earning report come out on Tuesday. It's stock trading action survived this news unscathed. Here is it's five day chart as of the end of Thursday. Maybe the 420.00 or the 422.50 series Calls are better to look at? Here they are. But wait. Deere got clobbered today on the release of a quarterly earning's report. Why didn't Caterpillar sell off in price in sympathy? It shoud have. Deere sold off $34.70. For this reason alone I would be more inclined to purshase the Puts. Here is the series I would consider. To be continued.
Post a Comment

An Obsession With Snowflake On A Friday Morning

Let's continue with a printout showing how the 170 Calls that expire today closed yesterday on Thursday. Stocks in this price range are known to fluctuate two or three dollars in one day.
In yesterday's blog I said "I don't like it's sideways moving action. To me it doesn't inspire a Friday morning bounce." So here we are today and look at this early morning action.
So the stock is down 26 cents four minutes after the opening. No big deal. It's not big enough of a decline to make you want to jump and to catch a reversal. Had it quickly dropped two dollars and the Call options dropped to fifty or sixty cents then a wave of bargain hunters would be jumping in. In the next printout it is down slightly more.
The above five chart shows this sideways action I talked about. Now this, a sudden dip at 9:48:00 a.m. and the 170 Calls become toast.
The 170 Call options drop sharply in price.
That's why holding a 170 Call bought at Thursday at the close hoping for a bounce on the opening would have being a bad call.
At 10:45 a.m. it only gets worse.
At this point in the exercise it's kind of game over. Seeing a stock go sideways all day on a Thursday makes it a fools game to be looking at the upside on the following day. Here is how the 170 Calls closed the day.
The Puts are where the action is. Now quickly read about this. It will open your eyes to how the super rich play the same game in a much bigger way. It's not about Snowflake but it's about another stock called First Solar. All stocks can be exposed to the super rich placing option bets.
Can you see how option traders are swimming in a sea of sharks? Now a quick recap of the action in the Puts starting with a one day look at how Snowflake traded on the day. Look at where the Puts were trading at 9:36:37 a.m.
Look at how low the volume of trading was in this series of Puts. Now a look at how high the Puts reached during the day.
Learn to understand that the five minute point into the markets on Friday morning on "one-day" options often are pivotal.

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 slightly 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-ma...
Read more