Caterpillar builds things the world needs. Rivals are few and far between. Here is how Caterpillar traded last week. It was down $4.35. The stock has had a good run in the last while. Option traders seem to stay away from playing options on Caterpillar. This stock began a major move upwards back in September. Now we are in a situation where Caterpillar's quarterly earnings report will be coming out this Thursday morning before the markets open. Typically when this happens the stock moves up or down like $10.00 to $20.00 in the first few opening minutes of trading. This time should be no different. Analyst have already weighted in their opinions of what the earning numbers will look like.
Here is how two series of options (one series of Calls and one series of Puts) closed on Friday Oct 24th. These two series of options still have one week of trading life left in them.
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Both the Calls and Puts are super expensive. Bad news could rock the stock for like $15.00-$35.00 per share and good news might do the opposite. Nextflix last week sold off $1,41.67, most of it in a very compressed period of time .
No stock is immune from unexpected dips. Here now is Caterpillar's three month chart followed by Tesla's three month chart.
Caterpillar seems to have a smoother ride and Tesla trades seem to be kind of choppy. In a previous blog posted on August 16th I talked about how Caterpillar survived it's last quarterly earnings report. At this point in time, a Monday morning there is no point in trying to jump into options on this stock. Both the Calls and Puts are to expensive. Nobody is playing them. There are 468.48 million Caterpillar outstanding. Why isn't there any "covered calls" writing happening? In a way that is a bullish signal. Let's check back later to see what happens. *For a reference point only here is a look at one series of Puts at 10:35 a.m. on Monday morning.
Here is how these Puts closed on Monday.
Here is how Caterpillar traded on the day. You could have made money playing them down in the morning then switching in the afternoon back up again to still be out on the close. Do you thing some traders are doing that? In this case we are talking about a stock going down for half the day and then back up again. It's easier said than done.
To be continued. Now here is how Caterpillar traded on Tuesday.
To be continued. Wednesday morning. It's earnigs are out.
Now this.
Call holders who where bold enough to get in yesterday were rewarded for being brave. Here is how Caterpillar closed out the day.
Look at the percentage gains in some of these "out-of-the-money" Calls. This action was difficult to see coming.
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