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Boeing Calls. Learning To Catch The Action

It's Monday morning and earnings come out tomorrow. Only a small number of new Call and Put holders are lining up to do battle. Here is it's five day chart. Here are one series of the Boing Calls and Puts closed the day with it's earning report coming out before the opening tomorrow. It's the classic case of having more outstanding Calls than Puts before any earning's report. Option traders are inherently optimistic. Could you buy both a Call and a Put and hope that the stock moves more than about $10.50 in one direction? That's what it would take to break even. I don't like such a strategy however it does sometimes work. Remember that Tesla dropped about $26.00 on the opening last week after it reported? Here is how Boeing closed the day. Here is the effect of how this strong close affected the 235 Calls and Puts. Both the Calls and Puts were pretty boxed in on the day. Let's see what the morning brings. It happened. It's earnings where releas...
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One Of The Most Difficult Stocks To Play Options On Is John Deere.

 The stock is mostly institutional owned and it's short interest ratio is 1.74%. Institutions pay big bucks for investment advice. The DJIA was over 450 points on Friday's close and this stocks five day chart keeps rolling along. Deere closed up  $9.24 on the day. On the week it was up $13.73. 

Anyone who bought "at-the-money" Calls on the closing on Thursday when it was trading for $403.00 .more than doubled their money on Friday. Yet look at  how low the open interest numbers are and look at how few contracts traded on the day..
Now look at the prices of the Calls and Puts on the 520 series going into a fresh new week of trading. First the Calls. This is how they closed the week on Friday.
Not really much interest and the same is true with the Puts.
I have witnessed this chart formation so many times before. I don't like it. It might need more time to move sideways. Can you see how flat it traded mid week? Now look at the second chart below. It shows how Deere jumped a few weeks back on an earnings report. On May 15th I wrote a blog about how their earnings were not all that great. It jumped up anyways.
So what do we now need to look at? We need to see it's thirty day chart so see if it's ready to top out.

No clues are offered here. It might want move up another $10.00.
Lets watch this stock.  At this point in time, going into a Monday morning, both the Calls and Puts are expensive. Let's see what happens to them tomorrow. If it decides to  jump up  two dollars sometime after the opening I would be looking at playing the Puts on the downside which expire this Friday. At this point in time, Friday is still  a long ways away. 
Now here we are at 11:45 on Monday morning. Deere is kind of a clunky stock to play option on.


Might this be a good entry point to purchase Puts?


This is the first time today the Put options dropped in price in a meaningful way. Let's watch and see what happens. Now this at 12:12 p.m.. Still no takers. To be continued.

Another look.



The market closed the day as follows.


The 520 series of Puts closed as follows.






Can you see the "Bids and Asks" shooting up? It's anticipating a lower opening. Here is it's one day chart.

To be continued. Now this. I don't agree

.. Now Tuesday action.






It dropped and created an opportunity to take profits. Next to no traders in the world were playing this.  One of the reasons is the Deere's stock price is shooting up to all time highs. Playing the downside is dangerous. What is there to learn from this blog? Well watching it from hour to hour like we did yesterday is almost an essential part of making a successful trade.  As you can now see, hanging onto this position after the sell off this morning would have been a costly mistake. 
Now what? Do we continue to watch this position until the end of the week? No.  It's time to move on and look at something else with fresh eyes. Deere is a difficult stock to play options on.

The story really never ends. Today is Wednesday and Deere is back up again.

Could you play it again for the downside? The DJIA is up about 280 points. The answer is that it's 1:30 p.m. in the afternoon and why would you want to? The 1:30 p.m. time periods are not usually the times to be looking for reversals in the stock on an upward moving day.

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