Featured

Micron Technology. A Nervous Market With Big "One-Day" Option Swings

It's Friday July 31st. Look at this stocks one and five day charts and then look at how one series on Puts which expire today struck gold. First it's one and five day chart. ... I don't know much about this stock however this blog follows the last blog on the topic of buying Puts on spiking stocks. Look at how this one series of Puts below has reacted on this one day selloff. Had I picked a series of Puts further "out-of-the-money" the gains would be even more remarkable. Look at the low of the day which happened on the morning spike and look at where the option is at now! Yet wait the game is not as easy as it looks. How often does a stock drop that much in one day? Not very often. Look at how Apple dropped like 30 points after an earning's release and this series of "out-of-the-money" Puts merely doubled. It could be argued that risk involved in making the trade outweighed any potential reward. If we now go back to our friend, the stock name...
Post a Comment

Caterpillar Drops $60.00 In Five Days - Noon On A Wednesday

In past blogs I have mentioned how light the volume of trading is in Caterpillar options. Trading them is a challenge. Deere options are also like this. Caterpillar can and does (in recent times) swing $10.00 on any given day. It is noon on a Wednesday and this the one day of the week where you can look for reversals on "one-week" options expiring on Friday. I have talked about this many times before. Here are it's five and one day charts.
Now a look at two of it's Call option series.
The 560 series actually offer excellent value given how large it's morning drop was. Who cares to check the news on it? When it drops this much this quickly the bad news, if any, is already baked into the equastion. Now the second series of Call options I am showing you are $44.00 "out-of-the-money" and expire in 2.5 days. "Out-of-the-money" Calls to this extreme are a speciailty item. In layman's terms they are a longshots. They can be excellent trading vehicles if you happen to catch a reversal in a stocks move. A reversal of like fifteen dollars over two or three hours in the near term (like today) and not on the last day they expire would move the needle on these ones. You don't need a full $44.00 reversal. One caveat is that the wide spreads can be a detriment to you in the trading experience. You have to be more than fair in picking an exit price. More about that at another time.
Now this just after 1:00 p.m.
In just 59 minutes you could exist this position with a modest profit. Or look at these ones. The stock is up $3.90 from when we last looked at it and the extreme "out-of-the-money" Calls are actually down in price. It's going to take a ten dollar or so upward swing to get this series of Calls up to a double in price. Let's see what happens.
To be continued. Notice on all of my most recent blogs I have taken the approach of getting in and out on the same day. To be continued. So here is how the 560 series of Calls closed the day.
What about the Dec.19th Calls with the striking price of 605? Here they are. They didn't do very much.
Now this, a one day chart of how Caterpillar traded. Can you see the bounce from noon to 1:00 p.m.?
...........
.......... It might jump $20.00 tomorrow. It was down $27.02 today. It's Caterpillar. Here also is how the markets closed on the day.
I didn't have an afternoon rally.

Comments

Post a Comment

Popular posts from this blog

Waiting For A Drop On The Opening On Bad News - Eli Lilly

Image
Here is the bad news. The company is Eli Lilly. How bad is this news? Well look at it trading in the premarkets. So what do I think? I think the news is a setback of sorts, but not really all that bad. The stock is going to open lower, that's a given. It's like trying to play Boeing after an announcement that an airplane has crashed. So the stock is going to crash and it might have a small rebound and then it's going to slide down some more. A test of sorts will happen sometime in the afternoon. It might stock falling but then where will it go from there? The best case scenario is a recognition that investors got it all wrong and the stock ends up flat on the day. Yet there might be more of a downward dumping of the stock on the close followed by a selloff on tomorrows opening. Should option players be jumping in to play the upside on next week's Calls? That is the question. Here is a look at Boeing on the days after a crash. Day two after the crash was equally as ...
Read more

News on Polestar , Lucid (Trading After A Reverse Stock Split) Plus Ford News And Vinfast

Image
Look at the one year chart on Polester. Now it's one month chart. What's going on? It's confusing. It was down $.36 cents on the week. If you want you can spend $.20 or $.25 on Puts and hope that the company goes under in the next five or six months. They recently raised more money by releasing more shares so it's running out of options. You can't run at a loss forever and this news will most likely scare off potential new car buyers. This actually is a low number of outstanding Put options. The consensus seems to be that it is not game over yet. Lucid started trading this week on a "one-for-ten" reverse stock split. Here is its one week chart. It was down $1.39 on the week. It's also going to struggle. Both of these stocks have challenges ahead. On a more positive note here is a chart that looks kind of perky. Ford on the week. The stock was down $.03 cents on the week and it was the 3th highest in share volume trading on the NYSE. It appears...
Read more

A Fireside Chat - One Year Options and Thirty Day Options. Which is Better?

Image
Some say to think small, not big. Trying to play Disney options is thinking big. It is a stock slightly out of favor. If we start with it's a three year chart, we will see it is down by about 50% over that period of time. Now it's one year chart. If the stock can break 110 in early 2024 the sky is the limit. It does have a lot of moving parts so anything could happen. Look at these Calls options one year out. One year in options buys a lot of time.They look reasonable. If the stock ever inched up to the $105.00 price level in the three or four months these options would jump up in price by about 50%. Even more if they had really good news. Yet it's the "what-if" aspect of the equation that castes such a trade in doubt. "What if" stories just don't cut it. There are to many variables in play. Then again, why are we even thinking of long-term Call options after a December's rally? Let's switch gears. If consumers are out spending for X-ma...
Read more