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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.
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A Follow Up On The Deere Crash

Let's quickly get up to speed. Here is a chart on Deere at 1:08 p.m on a Thursday and a look at the $480.00 series of Calls which expire tomorrow. Note the stock at this point in time is down $35.12 on the day on a bad earnings report.
Now this, a look at one series of Calls. The 480 series of Call options. They look cheap. In a recent blog (well just last week) the stock Eli Lilly was in the exact same boat. Here is it's 30 day and 5 day charts showing a rebound after a steep decline.
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We are talking about Eli Lilly crashing in one day and then moving up after that like $50.00 in just five trading sessions. Isn't it true that stocks after a major fall like this tend to take a couple of days to rebound back up again if that's the direction they decide to go? Based on this occurance isn't it possible that Deere could sell off some more before the end of today's trading day? Here is a look at the 480 series of Puts that expire tomorrow. The time now is 1:39 p.m. (on a Thursday) and they are trading at $475.00 per contract. Back at 1:09 p.m. they were trading at $431.00. .
Guess what they closed at at the end of the day and what do it's one and five day charts look like?
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So the Puts closed the day at a price lower than they were trading at back at 1:09 p.m.. Usually further weakness comes into a stock in the last few minutes of trading on a day of a major decline like this.This time that didn't happen. Remember also that the 480 series of Calls we were looking at were trading at $431.00 at 1:09:00 p.m.? Here is what they were trading at on the close. $445.00. Might they now double in price on the opening and then sell off as quickly as they went up? It will be a Friday and if you are playing one day options anything can happen. With this stock in this situation I don't want to be in any part of this action. I this case the risk is to high. Here is the closing reading I am talking about.
So what's the bottom line. If you made money on today's sell off you can afford to speculate on the direction of tomorrow's action . If you didn't make money on it just forget about it. Well don't totally forget about it. In three months time Deere will have another earnings report. Maybe you can apply what you just learned here to that scenario.

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