What's the DJIA doing?
How is the chart on Caterpillar?
Isn't it true most of us would just stay away and forget thinking about purchasing Puts. Here now are the "near-to-the-money" Puts.
Now the further "out-of-the-money" Puts that will only start to reacte with a sell-off of three or four dollars.
The volume at this point in time is greater in the "near-to-the-money" Puts however they are both scary from the point of view that there is nothing on the near term horizon to make them change the coarse of their direction they are now on. Early buyers in this morning were hoping for an early morning market reversal. It didn't happen. Now this, about 50 minutes later.
The Puts have become more affordable. Caterpillar at 11:35 a.m. keeps inching up.
Now a 11:38 a.m. look at the 350 and 345 series of Caterpillar Puts. I like the 345 Puts now in the one dollar range but only for a short term hold of a few hours.==
Here is it's five day cart.
I think a Tuesday afternoon dip is possible. Yesterday was a 1,000 point to the upside day in the D.J.I.A and the markets are now due for a pause. But what do I know? I never played the rally up. It's like I never saw the recent Disney rally but it lead me to instantly trying to figure out the downside. To be continued. Now a noon hour update.
Now this, an end of the day close.
The markets got nervous towards the end of the day and we will now have to see what Wednesday brings. Being caught holding a position on the downside after a scorching hot Monday is not a bad space to be in. The danger of course is that Caterpillar might jump another five dollars a share for each of the next couple of days. That would be disastrous to Put option holders. But wait. Missing from this story is the backgound news that is causing Caterpillar's stock price to be so strong. Buyers getting in now are doing it on the conviction that prices are even going to go higher. It's instiutional buyers. In part it has something to do with their forward thinkings. Here is the Wednesday morning action. Caterpillar is coming off in price.
To be continued. (The pain of holding an overnight position paid off). Here is how it closd out Wednesday. With only two days to go this now really isn't a position I would be confident holding.
The 350 Puts closed at bid $3.40 ask $3.65 Holding options overnight with two days to go in this price range is dangerous. *** What about the 345 Puts which are "out-of-the-money". Buying them now would be a leap of faith. So many stocks are rebounding up because of the Trump news lowering tariff costs. Thursday and Friday market market action can be totally different than what has happened at the start of the week. Let's see if being in Puts is now the wrong space to be in.
An end of week summary. Caterpillar held tough and did not sell off. The 350 and 345 Puts both ended up expiring worthless. Here is the five day chart.
** One week options. What happens in the first two days of the week is often disconnected with what happens on the last three days of the week, especially during weeks that earning reports are coming out. Wednesdays can be reset days and Thursday are days when the time values built into option premiums can quickly evaporate. One noticable observation in all off these blogs is the low count number of overnight open positions. Getting in and out in one day seems to be the name of the game.
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