CAT Puts

Lets start with this. A five day look at it's chart. Just over $14.00 at the start of last week to end just down under $12.00 at the end. Is anything bad with the company happening? Now this. An open interest of only 17 as of of Friday. Let's fast forward to February 19th. Here are other drone stocks to watch. They all seem to go up and down together. .. .. .. .. .. Options on ten dollar stocks are difficult to play and it gets more difficult when they are drone stocks. Dragonfly is a Canadian company and I live in Canada so this is one I follow. Here is it's one year chart. It's dangerous with a book value of only $.85 cents per share. Do your own homework. A January 10, 2027 Call will cost you $3.40. Yes there are traders who find value in this proposition. Options like this scare me.

What does a downward spike on the closing mean? Does it mean something different than a upward spike on the opening? Spikes upwards on the opening happen on good news. Spikes downwards on the close are not necessarily for company related issues. More often than not it has more to to do with just getting out of the market. A case in point Apple dropped in price rapidly towards the close to then only being off only marginally after the close. A sense of stability was created with that reading . So are Calls on the upside the way to go? Let me show you two different series of Call options with the intentions of pointing out how "in-the-money-Calls" trade differently than only slightly "out-of-the-money" Calls. First the "in-the-money" Calls. Now the only slightly "out-of-the-money" Calls. Let's watch to see the difference in how they trade. On a flat to slighty down opening here is how they are trading. As expected, the "out-of-the-mo...

Let's start with this chart. Tesla is stuttering after the opening. Here are how one series of Calls are trading. What you need to know is that these are Call options which expire today, on a Wednesday which are not the usual Friday expiring options I commonly follow. Who would be bold enough to be playing "last-day-to-expiring" options? Next, Tesla at 1:42 p.m. ... Now a different look at the same action. So at 11:08 a.m. thirty three minutes after we first started looking at them they jumped up to $4.50 per contract and at 1.04 p.m. they jumped up to $4.33. These are impressive gains. Now this at 3:00 p.m.. . These Call options have run out of time. 3:00 p.m. is deadline for when retail traders have to be out of their positions. Tesla can sometimes jump $25.00 in one day. I get it as to why there is a fascination for one day option trading on Tesla, especially when the DJIA trades so erratically on a "hour-to-hour" basis. With this kind of trading you h...

Last Friday's blog covered the same topic. Here we are on Tuesday after Monday being a holiday. Tesla down $12.58. We are looking at Call options five dollars "out-of-the-money" with 1.5 days of trading life in them. ... Now this. A bit of a pop after lunch. Now here is how the stock traded on the day. Can you see how the exit point at 2:10 p.m. was a tad premature. Yet look at how smooth a ride it was. What did these Call options ended up trading for at the end of the day? Well it doesn't really matter. My last blog about playing Tesla showed the vary same thing happening. Yes you can play these options if you time it right. Timing is everything. Thousands of traders are tuned into this action.

Exxon dropped on the opening. It was it's first trading session in three days. .... At 10:01 a.m. the interest in playing it for a rebound was muted. Now this. ... A sell ticket in at $2.70 would at this point would get a fill in seconds. Now this at 11:05 a.m.. Timing is everything. Here is how Exxon closed the day. This kind of action never stops. See my November 19th blog "Can You Play Exxon Crashing On The Opening? The sell off that morning was even larger. ** Exxon on Wednesday continued it's upward trend.

I should have called this blog "Ford Calls" or "Harley Davidson Calls" to get more hits but this time I want to show you something a little bit different. What I want to show you is how options with seven days of trading life left in them can suprise. Seven days and not five days. What's the big difference? Well the extra day buys you the action of a Friday bounce without having to worry about your option position expiring that day. Seven and not six days also. These options would need to be bought on a Thursday before the close. This may sound kind of confusing but let me show you two examples of what played itself out last Friday. Let's first use the stock Harley Davidson and use it's Call options as an example. Here is how "seven-day-out-Call-options" would have traded the day later on Friday February 12th. They jumped 60% in one day! What kind of a jump in the stock's price would have caused that to happen? Well let's look at it...