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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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Deere Is Coming Out With An Earnings Report On Thursday. It's Wednesday Afternoon.

Here is how the 510 Calls and Puts are trading. The stock is currently trading at $508.84. Earnings come out before the market opens tomorrow.
Now here is it's five day chart as of 2:00 p.m.
Now it's thirty day chart.
Not much action. Both the Call and Put options are expensive. They should be. Deere has a history of moving wildly on the release of earning reports. Here for example is how Deere traded on the day of it's first quarter earnings report earlier this year and what was said at that time. The spike in the chart is the day the earnings report was released.
Now back to today's situation. Notice the 510 Calls for the day are up on the day. It looks like the street is looking for a bounce. What do the $517.50 Calls and the $520.00 Calls look like at 2:23 p.m.? Notice the volume in the Calls is the same as it is in the Puts and that fifteen days ago the stock was trading about $15.00 higher in price. This tells me that the stock will have no issue jumping back up to that price range if the earning report on the opening is good. But wait, we have the tariffs and everything is changing. Farmers are getting hit. Who knows what's going to happen on the opening tomorrow. If the stock goes up it's going to be vote of confidence for the economy. What are the odds of that? Time out. People see options as being dangerous trading vehicles. They are. All options are tough to play.
Yes they are somewhat expensive but these Deere have a part two aspect to them as they don't expire until the following day. A seven or eight dollar jump on the opening would help to move the needle a touch on both the Calls and Puts. These are the riskiest trades in the world to do. This is going to a roller coaster ride. Rides like this happen four times a year. Learn to look for them. Now this.
..............................
Do you know what this is? It's the premarket trading and the stock is down. Let's go back to a look at the Puts yesterday afternoon.
Nobody is playing them. Now a 9:10 a.m. look at the pre-markets.
The morning action has now begun.
Option traders can sometimes find themselves in another world. My next blog might follow up on this same situation.

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