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Caterpillar - Catching A Reversal On A Tuesday

Tuesdays are not the best of days to look for reversals however Caterpillar jumped a modest amount which impacted the value of this series of Puts. This is a 1:36 p.m. readout. Here is it's five day chart. Now its one day chart. It would seem like kind of a random thing to do and why fight a strong stock? One reason is that the markets are only mildly up and could give back some of it's gains before the end of the day. Caterpillar could be gaining strenght based on last weeks articles talking about how Caterpillar could potential gain from this new AI movement. Notice that the five day chart is in an uptrend and notice the small open interest numbers in the Puts. No one wants to hold Puts on Caterpillar when it is in this uptrend. Could it has a soft selloff in the next two hours? Here it is now 50 minutes later. The "bid and ask" are almost unchanged. There is also not much change in the DJIA index.Now this. The DJIA is sellig off and Caterpillar is hanging ...
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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.

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