Featured

Ford Is Expected To Open Lower

Let's jump right in. It's Monday morning and here is how the 12 series of it's Calls that are expiring this coming Friday are starting the week. The "bid-and-ask" on the stock was down about $.05 cents in the premarkets. The markets are sometimes slow to get going after a weekend. If the stock opened lower in sympathy with the markets opening lower, how low could this $.27 premium trade down to? Would they then be a good buy if they dropped to like $.19? They do afterall still have five full days of trading like left in them. Now this, today's action. It was nothing to crazy. The stock only moved up $.03 or three cents on entire the day. This printout is not pretty but it tells you a lot of stuff. 1) The low of the day. It was $.11 or eleven dollars a contract at around 11 a.m. Yes the stock sputtered a touch, then it moved up again. 2) Look at the high of the day, $.27 or twenty seven dollars a contrct which is over a double from the low of the day. 3) I am...
Post a Comment

Caterpillar, Deere And Tesla. These Are Scary Times To Be Trading Options On These Stocks.

We are witnessing huge intraday price movements on stocks like Caterpillar, Deere and to a lesser degree Tesla in the last two weeks. Tesla sales are off in Europe as BYD continues to drop off boatloads of new vehicles into countries never before receptive to their offerings. Tesla now has competition. Caterpillar and Deere now have to worry about tariffs. "Market rotations" are now the new theme as investors worry about where to park their money. Caterpillars and Deeres recent meteorological rises are under attact.
Silver stocks continue to rise and Bitcoin holders are not sleeping well at night. The price of gold has gone up and is not showing signs of coming off. People are now wondering if they should be lightning up on the weight of their jewerly boxes. Investors holding baskets of stocks now wonder why. Might they wake up one morning to find everything down 20%. Eight hundred point market drops in one day are now shrugged off as being nothing to worry about and they help to create opportunities to trounce on rebounds. Silver stocks are on a terror. Will these stocks continue to go upwards? Traders have become afraid to trade in these markets, especially in short term options. Today, a Thursday Caterpillar opened at a touch higher at 9:30 a.m. and then quickly sold off. The chart below shows us that.
Traders have to be glued to their screen to catch this action however if you are only watching only a small handful of stocks it is possible to focus on what is happening. This is the "one-day" trading action in the $770.00 Puts which expire tomorrow.
They basically tripled in price in the first hour of trading. What about Tesla? The same thing happened.
....
With both of these stocks the downward action happened in the morning. The time period of 9:30 a.m. to 10:30 a.m. are prime action times. Traders are looking for $5.00 or $10.00 price swings in one hour trading periods of time on stocks like Caterpillar, Deere or Tesla. Is there a hint of a "wild-west" mentality when trading like this? Unfortunately yes. Now the markets on Friday morning.
Remember I said stay away. Trying to play one day bounces on Fridays when it drops this much early in the trading session is a tough game to play. Buying "one-week-out" Call options in this case might be a better way to go. Here they are, next's week options five trading sessions away at around 1:42 p.m. Buying in at this time of the day with next week options also gives you a chance to particpate in a late day reversal.
Now Caterpillar and their next weeks Calls. The lower chart shows how next week's 740 series of Calls have traded on the day.
..
Five day out Calls buy a lot of time. Both Telsa and Caterpillar experienced pulldowns at the 3:00 p.m. required option deadline to be out of your option position on last day to expiring options.
Now for a comment about the realities of playing Caterpillar and Deere options. No one is trying to daytrade them on Thursdays and Fridays. Look at the above chart and check out the volume of trading in next week's Caterpillar 740 series of Calls at 1:55 p.m. in the afternoon. Only 17 contracts traded up to that time period in the day. So much for all the chatter about capitalizing on what potentially could be an extreme oversold situation. With only 17 contracts traded it's a warning sign the risk of holding over the weekend positions in this stock is not worth the risk to most traders. But wait, low numbers like this can also mean the exact opposite. Traders are not looking hard enough to seek out new situations. Relying on low volumes of trading as an indication of what might happen next is not much of a startegy. In contrast Tesla's options, both Calls and Puts trade thousands of contracts everyday. There are two reasons for this. Options on stocks in the $400.00 price range are cheaper that options on stocks in the $700.00 range. That plus the dynamics of all of Tesla's moving parts are in a constant state of flux. Yet then again trying to outsmart Tesla next movement looking for an uptick in price is a dangerous game to play in downward moving markets like we just had this week. Let's end this blog with a look at these three five day charts. From the way I see it, opportunities abound.
** Here now is how the 740 series of Calls traded on Monday, the following trading session.
Notice the light volume of trading. Now this on Tuesday.
In panic times like this people pull their money out of the market. These are scary times.

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

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

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