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Trumph Picks A Friday To Change The Rules.

This is kind of dirty pool. So the stock and options jumped on this news. Did Trumph's cronies get in on this action? It's difficult to tell as they could have got in a few days or a week ago and they could have bought Call options with longer term expiracy dates. Or his stockbroker cronies could have bought the stock to also profit in this gain. Certainly the authors formulating these policy changes were part of this action. In all fairness I can't prove that insiders profited from this Friday event. Yet here is the thing. Releasing this kind of news on a Monday or Tuesday would mitigate this kind of an event from being as impactful as it potentially could be. Option premiums shrink in value the closer you get to their expiracy dates. Lawmakers know this. They should know better than to allow this to happen. No government policy changes that will directly effect the stock market should be allowed on the trading days of the week when the majority of short term Call and P...
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Why The Appeal Of Trading Caterpillar Call Options Is Now Diminishing

In previous blogs I looked at Caterpillar spiking upwards through the $1,000.00 barrier for the very first time. Twenty and thirty and forty dollar daily jumps on the stock were the norm. Today we are entering more sobering times. Pundits are now commenting on the upcoming release on August 4th of Caterpillar's quarterly earning report. That is not far away. The stock has doubled in price in a relatively short period of time. Is the party over? Look at Caterpillars one year chart. The companies earnings have not doubled in the last year. Far from it.
So now what? Buy a Put option thirty days out in the hopes the stock might drop ten percent on a more normalized earning's report? Maybe. Here is an example of the cost of what one of these Puts would look like.
Given it's current bid and ask the stock would have to drop to the $1,005.00 just to break even. It could, however most active option day traders are seeking opportunities which can play out in hours or in a day. Case in point is this "on-the-cusp" of being "in-the-money" Puts which expire on July 3th. Notice the open interest going into today's trading.
Needed now is a drop of about $13.00 just to break even. A smaller drop would also help these Puts if it happened this afternoon or on tomorrow's opening. Stocks reaching and breaking through the $1,000 dollar range can often have explosive one day upper spikes. I captured that action last week. We are beyond that stage now. Let's see what happens. Now this.
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$13.75 went to $66.25. Caterpillar Puts can sometimes suprise. Now a Friday morning update. This series of calls has now ended. $13.75 to $73.00!
Let's see what happens when their earnings report comes out.

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