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Insane One Day Action on Caterpillar And Deere In One Day

First Caterpillar. I can't make this kind if stuff up. .......... Only 136 contracts in this one seies traded today.That's nothing. I have being commenting on these low numbers in recent periods of time. We hear the terminology "buy-on-the-dips". I didn't see that happening today. Deere the same thing however it's Call action was less inspiring.. Very few Deere Calls traded. Here is how the DJIA traded on the day. Now their thirty day charts. First Caterpillar. Now Deere. Look at Caterpillars one day chart yesterday. One series of options traded down to $4.00 to only then rebound to $23.00. That was the play of the week. Once again, Wednesdays like I have said fifty times before are the best days on the week to look for reverals on "one-week-to-expiring options". At this point in time I would skip playing the Thursday last "two-days-to-expiring options" on these two stocks and check back into the action on Friday to only look at Te...
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The Sickly Feeling Of Sitting On Tesla Calls Last Thursday If You bought Them For Double The Price The Day Before.

I don't usually talk about sickly feelings as it pertains to "option trading". The 332.50 series of Tesla Calls on Thursday August 21st that were to expire the next day closed at $2.87 per contract with the stock closing at $320.11. What that means is at that time they were "out-of-the-money" by $2.39 and would end up worthless in value the next day unless Tesla jumped back upwards again. Upwards and over the 322.50 price.The 332.50 price plus another $2.39 just to break before even figuring out the commission costs. I also gave the example in a recent blog of how back at Wednesday on the close these same series of Call options were trading at $5.75 a contract after reaching an interday high of $11.30. Look at its five day trading chart to see what caused these drastic price changes.
With the bounce on Friday a $2.87 contract went as high as $17.45 from a low of $2.25 on the opening. That means a Telsa Call option priced at $225.00 on Friday morning increased in value to $1,745.00 in one day. That was an exceptional day triggered by the Federal Reserve Chair Jerome Powell crafting a speech to appease his listeners.
This event is now history and when you turn on your computer on Monday morning to study the markets looking for trading opportunities everything will have changed. "McDonalds" might be up $1.65, "Boeing" might be down $2.74 and "Ford" might be off $.12. If you messed up on your one contract Tesla trade last week your desire to try something different will have wained. The experience of paying $575.00 for one Telsa Call last week on Wednesday to then find it trading the next day at $239.00 with one trading day to go might be super upsetting especially if you then decided to sell it at a loss. You could have lost $336.00 U.S. in one day if you didn't have the guts to hold onto it until Friday. What does that amount of money equate to in your life? One month's car payment, one month of food costs or airfare to and from your favorite holiday desination? You could have used that money simply to buy one share of Tesla that you could hold onto for as long as you like. Instinctly I don't like holding one week Call options on Wednesday that expire on Friday afternoon hoping for a Thursday morning rally. The time value premiums on Wednesday's short term options can be excessive. So think about this. Two week out Call options. They would be better right? Wouldn't all that extra time be a luxury? Sorry folks, it doesn't work that way. Two week out options seldom pan out the way you want them to. In contrast, one month out or one year out options sometimes do. All I really know is that the Tesla story will never end.

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