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What's Next For Caterpillar And Deere

Let's start with it's five day chart. You can see how it zoomed upwards this week as a result of it's earning report.
If you want to play the downside next's weeks options are going to cost you something like $1,000.00 per contract. Here are how one series of Puts, the 575 Puts closed the day on Friday.
So the stock has to drop like $12.00 in five trading sessions just to break even. What a daunting challenge trying to figure out these ones. Many option players accustom to playing the ups and downs of Caterpillar when it was trading at price levels like $300.00 or $350.00 now feel totally out of the game. It's not a game for the little guys. I get it. Now this, a look at how Caterpillar traded on the day last Friday. Between 10:00 a.m. and 12:30 p.m. the stock dropped $15.00 dollars. The one day options that were expiring that day had an amazing price swing.
So a new trend I see happening is a shift away from playing one and two week out options to playing the one day only Friday options. Naysayers of the "don't ever play option crowd" once they wake up to this new reality are going to become so much more vocal. Now a comment about the current chart pattern of Caterpillar and which way it is going to trade next. Let me briefly compare what has happened to Caterpillar to what recently happened to G.M. It also recently shoot up on a good earnings report. This happened back on October 21st. It closed that day at $66.62.
That was like ten days ago and guess what it is trading at now? It's trading at $69.09. So my point is that when a stock has a sizable jump on a good earnings report it doesn't necessarily mean it's going to give up some of those gains in the following weeks. You might think it will but don't bet on it. Caterpllar options have a history on being thinly traded. Only six months ago it's price was half of what it is now. Very few option traders used Call options as a tool to cash in on upward trend bonanza. What about Deere? Is it going to pop on the release of it's earning report on November 20th?
It could. Here now is how the 460 series of Call options which expire the day after the earnings report comes out are trading. The 460 series of Calls are a touch "out-of-the-money".
These are "three-week-out-options" Look at the open interest in them. It's next to nothing. Folks, one day options, or two or three day options until expiring is the new game in town. That's what I am trying to say. I note that Tesla Calls doubled in value in the first hour of trading last Friday. I did a blog about that yesterday and in the blog it was noted that 4,441 Call options traded on the 440 series of Calls in the first seven minutes of trading! All that said, the "three-week-out" Deere Calls are something to consider and playing Caterpillar on the downside is not something that excites me.

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