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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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Caterpillar On A Hot Day

The D.J.I.A. is up going into the noon hour.
Let's look at the Puts on Caterpillar at 9:43 a.m.
Look at Caterpillars five day chart. Up $30.00 in five days.
Question. Why didn't I talk about buying Calls on it five days ago? Two reasons. 1) It's earning report doesn't come out until February 3th and that's when a decision to predict which way the stock will go might tweak my interest. 2) Here is how Caterpillar traded on the day of it's last earning report and a comment then made by management.
Notice how flat the stock traded on the few days leading up the release date. That tells me that was about to happen was truly a puzzle. The new concern now might be that Trumph with his tariffs might might cause unexpected things to happen. In any event, here we are looking at the downside on thes Puts that expire in two days time. Now here is an update on these same Puts at 12:36 p.m.
The stock in the last 2.5 hours is down $1.44 and the bid and ask on these Puts are only up slightly. Notice how low their trading volume are. If we look one striking price lower we will notice the same thing.
It appears that day traders now at 12:50 p.m. are not thinking about an afternoon sell off. I note Tesla is also having a strong day to the upside and option traders are on Tesla are more proactive in their thinkings.
Let's see if buying two day out Puts on a Wednesday with a strong market opening is a good thing to do? It would be nice to see a profit by the end of the day. Now the final readings.
...
If you bought the Puts this wasn't a pretty trade. Why is that? Well guessing the reversal in a strong stock is never an exact science. That plus the markets stayed strong until near the end of the day. The bottom line is that you can play mid week reversals on strong stocks for a one day play and make money in doing it.

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