CAT Puts

Look out. Option players can get whipsawed. A good earnings report can turn out to be a bad earnings report. If you have time read this. Here is how G.M. traded yesterday after the release of their quarterly earnings report. A heathy earnings report and the stock sold off in price. Now these two readouts. With the stock closing at $50.02 cents might it rebound on the morning after? Now look at this. These options in the first hour of trading don't know what they want to do and they still have a few days life left in them. Ford has an earnings report coming out Feb. 5th. The results of G.M. large cash flows might tweak the interest in owing Ford Calls. Folks this is real time action where trading decisions abound. Here is a 10:03 a.m. printout of how G.M. is trading on the day. The stock is doing nothing. Let's look now at the Ford short options knowing their earning report is coming out in a few days. . Here is it's five day chart. It sold off yesterday in sympathy...

What a week for Caterpillar. Now this. A printout showing how one series of Calls, the $390.00 series traded on Tuesday last week. Thursday was January 23th. It was up over 313% in one day. If you look at the chart you can see how the stock moved up. Now look at how the same series of Calls closed out the week. Now notice the small volume of trading in this series of Calls and notice the very small outstanding "open interest" numbers. Caterpillar has over 130,000 employees. It boggles my mind that it's Call options don't have more of a following. I have mentioned this before and many of us know one of the the reason why. Caterpillar never has much gossip to talk about, other than the strike it had last year. Contrast this to let's say a stock like Apple. Apple like Caterpillar has an earnings report coming out this week. What might happen to it is widely reported. Wall Street is bracing for a weak iPhone sales number, especially in China, and a guide down for t...

4PDP5911ZaoxBr6mfs8I2LJ638DloKe3T3Ms8w7cpaeoWHfcyFwrs/s600/Screenshot%202025-01-14%2012.29.08%20PM.png"/> Why are we looking at this? Well can you see how Ford was trading at $10.00 only five days ago. If it ever rebounded back up to that level in the next couple of days or weeks these options would probabaly jump up twenty percent. In other words, "one-year-out" Call options on stocks in this price range offer amazing leverage. The fact that they are one year out doesn't rule out the possibilty that you could be "in-and-out" of them with a decent profit in a relatively short period of time. On a differing note, options on stocks in the five dollar range can sometimes suprise. Here is a stock I talked about before it had some big moves. For now, stay clear of all Moderna and Eli Lilly Call and Put options. That plus learn to appreciate that long term options can be used for short term gains. *** The same Ford Calls the very next day on the opening. ...

Let's begin by saying I am not a big fan of buying "two-week-out" options. Yes they cost a touch more than "one-week-out" options however that is not the reason why. I like thirty day out options and one year out options and Monday, Wednesday and Friday "one- day-options" better. So what's the matter with "two-week-out" options? Here is my answer. Back on January 6th we looked at the Interactive Brokers Group 180 series of Calls that expire on January 17th. At that time they were trading at $4.90 a contract. Here is a look at that printout I posted. Now this, a Friday January 10th printout. The DJIA closed down over six hundred points on the day. So here we are at the end of the week and we have for lack of a better word, wasted four days or almost half the life of these options. But wait. Can you see how they where down 47.66% on the day? That means on the previous closing session they were trading at $6.25 per contract. (It's a...