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

Staying With the 175 Calls on Boeing Of The Last Blog

One of the things I elluded to in my last blog is that weekends often act a reset buttons for the market. Sentiment can change. So Boeing jumped on Monday morning and the 175 Calls that expire this Friday went up. Here they are. They hit a high of $5.00. Sometimes it takes thirty or sixty minutes on Monday morning before this sentiment changes. That was the case this morning.
Then the market turned south and the DJIA closed dowm 649 points.
Let's now watch what this same series of the Puts did.
Can you see how options can be valuable trading vehicles in volatile markets? Caterpillar had the same story, a bounce on a Monday morning and an afternoon sell off. The Calls on Caterpillar that closed on Friday at $1.97 bounced as high as $8.40 on Monday morning.
Now look at what this same series of the Caterpillar Puts did on the afternoon.
What is there to learn from this? Well first don't be angry at yourself for not catching this action. Look at the low volume of Put options traded. Drops like this on a Monday muddy the waters for the rest of the week. The world needs to rethink the importance of option trading. Sometimes I feel that I am banging a drum that no one is listening to. All I really know is that Boeing and Caterpillar popped on the opening and then got slammed. A look at the same situation at 10:21 a.m. on the next day. First Boeing.
Now Caterpillar.
Can you see the power of options? Can you see the damage Trumph is causing messing with Tariffs? At some point in time traders will step in an attempt to stabilize the markets. Yet why not just stay away and look for happier days. Trying to outguess the markets is now at this time, a fools game.

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