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 released before the markets opened on Tuesday morning.
The reaction to Boeing's earnings was somewhat mutted. In the opening seconds the Call options more than doubled and lucky Call holders with "at-market-sell-tickets" were rewarded. Then the Put option holders had their turn. You don't see this kind of chart formation very often.
Both the Calls and the Puts disappointed. It's like a balloon popped and after it popped the excitement was all gone. The stock has suddenly lost direction. How do you figure out in which direction it wants to go? This week's Call and Put action might now attract nimble players. At 9:47 a.m. the Puts could have been purchased for $3.35.
Now this.
It might be game over for theses Calls.
What do I think is going to happen? In most instances a stock like this will sell off for most of the rest of the day before it decides it wants to rebound. Yet that's the way Tesla traded last week after it's earnings report. It started to rebound after it fell. What's going to happen this time? Maybe this poor earnings report is actually a good earning report. A case could be made for purchasing Boeing "one-week-out" 230 Calls which are five dollars lower in price than the 235 Calls we were previously watching. Here they are and here are this weeks 230 Calls. I am not a big fan of chasing reversals after a drop like this and I am like ten minutes to late in catching this most recent tiny reversal. It's to early in the morning to be looking for a turnaround. Might there also be yet another slight sell off on tomorrows opening?
Here is how Boeing at 2:20 p.m. is trading.
Here is how Boeing closed the day.
The 235 Puts were the winners on the day however they didn't do amazing well. They doubled.
here is Boeing's five day trading chart.
What are the lessons learned? First, in this kind of market last weeks news is now history. There was no need to get into the Calls or Puts on Boeing five or six trading days away to catch the action. The market are not that forward thinking. Point two. Notice the slight hint of a rebound around 10:30 a.m.? Early indications of rebounds upward after a drop of this magnitude most often peter out. 3) Needed now is more time for reflection. Use these points as a reference three months down the road when their next earning report comes out and accept the cost of the premiums being charged to play the game. Just pick the right direction. The odds of guessing correctly are pretty good.
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