Featured

Caterpillar And Tesla. These Are Scary Times To Be Trading Options.

We are witnessing huge intraday price movements on stocks like Caterpillar, Deere and to a lesser degree Tesla. Tesla sales are off in Europe as BYD continues to drop off boatloads of new vehicles into countries never before receptive to their offerings. Nvidia recent revenue earnings report helps to validate that teck stocks still have relevancy.
"Market rotation" is now the new theme in spotlight as investors worry about where to park their money. Caterpillars and Deeres recent meteorological rises are under attact. Tesla has a price earnings ratio which is sky high. What's that all about?
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 are left wondering why. Secretly many wonder if they might wake up one morning to find everything down 20%. That's just a number pulled from a hat. It could be a higher number. 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. Mining costs to produce this silver have remained steady. Silver mining companies are experiencing record profits levels. Have they all now gone up to much? Given this backdrop of so many things happening all at once many of us are tired. We notice that avocados and chocolates cost more however toothpaste prices can vary. It's the little things that seem to capture our attentions. Today, a Thursday Caterpillar opened at a touch higher at 9:30 a.m. and then quickly sold off. The series of Puts shown below expire tomorow.
Then at 10:28 the stock sold off to $729.58. Now this once again 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. Trading Tesla options can also be exhausting.
....
With both of these stocks the downward action happened in the morning. In this kind of markets the old days of buying options two and three days and one week out are now over. Learn to jump in just prior to the closing bell or seconds after the morning openings. The time peiod of 9:30 a.m. to 10:30 a.m. are prime action times. Hope for $5.00 or $10.00 price swings in one hour trding on stocks like Caterpillar, Deere or Tesla. Is there a hint of a "wild-west" mentality when trading like this? Unfortunately yes. The old days of waiting for things like government reports which might affect market sentiment are now over. Avoid waiting for earning reports to come out. If a stock is in a freefall and you're waiting for a rebound remember keep calm and purposely delay any thoughts you have about pulling the trigger to jump in for a rebound. Odds are your timing is off and you are overreacting. In fact walking away from something you think is a sure thing is often the best thing to do for reasons which will only become apparent to you twenty minutes later. Stepping away from the markets for a day or two is actually a good strategy. So to is only playing one short term option position at any one time. Conflicting situations tend to cloud your judgement. There will always be new opportunites tomorrow. That's the way I see it. Now the markets on Friday morning.
Remember I said stay away. Trying to play one day bounces on Fridays when it drops this much is a tough game to play. Buying one-week-out-Call options in this case might be a better way to go.

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

Another Blog On "Vinfast"

Image
There is so much to read about this companies history online. Do your own homework. Their success is not dependent on what ends up happening with their sales in North America. They are nimble. There are plenty of auto factories all over the world now for sale they can acquire. They have dabbled in Australia. Having access to money to keep going doesn't seem to be their problem. Rivian also seems to enjoy this advantage. Vinfast is currently building a new plant in India which could employ thousands of people. That's an emerging new market. New relationships are being built and new investors will be coming onboard. Are option players looking at this stock? Not really if we look at these "one-month-out" Calls. What about Calls further out? What about next January? Here is a look at the three and four series of Calls. Nobody seems willing to bet Vinfast Calls. Now this. Here are two snippets taken from a blog I wrote about this stock back in early December of 2024. ...
Read more