CAT Puts

As a writer if you get things wrong you quicky lose all creditability. I understand that. In a blog on Pfizer last week I looked at an entire week of it's trading activities of it's series of 25.00 Calls. The exercise was exhausting. This week I am only going to pinpoint one day of it's trading. Today is Wednesday. Shown above is one series of Call options on Pfizer which only have two remaining days of trading life left in them before they expire. Most option traders dislike options on stocks in this price range for a number of reasons. Twenty five dollar stocks can wander aimlessly for extended periods of time. I get that. Then why would I be stupid enough to be looking at these Calls at this particular period of time? Two reasons. First, there is the chance Pfizer might rebound on the opening. Why? Well the DJIA closed the day down just shy of 500 points. Trumph does strange things which causes market swings. A rebound upwards could happen tomorrow morning for no reason...

It's five day and one day chart. It dipped on the opening this morning and the 'buy-on-the-dips' mentality won again. Like a $7.00 interday jump in one series of it's Call options as witnessed on the second chart below. Now it's 30 day chart. This is madness. How can a stock keep going up? Now this, a chart borrowed from a Caterpillar blog I posted on December 26th. That wasn't that long ago. It tells a different story. It shows Caterpillar dropping thirty dollars in one morning! So here we are now in a situation where Caterpillar is up $30.00 in three trading sessions. We are in the premarkets on Wednesday morning. Wednesdays can be good days for market reversals. Here are the 630 series of Puts that expire this Friday. The open interest in them as with all of Caterpillars options are very low. The stock given it's premarket pricing is expected to open slightly lower than it's closing price. This $600.00 dollar pricing is in $U.S. money so it is ...

It's chart. A look at it's Calls. A look at Tesla a minute or two earlier. Can you jump in the play it for a rebound? These Calls are down 50% on the opening. So we are experiences early morning market jitters. Tesla was down $37.12 last week. That's like $5.00 everyday. Is looking for an upward reversal simply wishful thinking? Hold that thought. Now this, another shoe has fallen off. A new thought. 10:00 a.m. often times are for lack of better words "points of inflection" or better yet, "points or pre-inflections". There is no reason for the stock to stop dropping but computer buying programs might start to kick in willing to accept the obvious degree of risk. Is that at 10:07 a.m. what we are looking at now? The problem with rebounds like is that if the stock starts move up a touch it runs the risk of getting knocked down again. I don't like trading Tesla this early in the week with it's option series that expire this Friday. Let's w...

First it's five day chart and a look at how one series of it's Calls that expired that day (Friday) traded. They went up from their lows of the day by about nine-fold! Now let's look at it's one day chart that caused that kind of action to happen. It was a gamble because it involved an exercise of riding a Call option that was about to expire that same day. Notice it got off to a rough start before it began to take off on the upside. Our last blog on Boeing shared the same experience. What's going to happen this week? We have Trump bombing Venezuela. Given the expected volatilty to follow might this be a good opportunity to revisit last weeks blog (Dec 30th) on concept of doing an option straddle? Buy one Put and one Call on the same stock at the same time with the same expiry date and see what happens. In using this stategy (which once again in most instantaneous is a very stupid thing to do) the hope is that the stock will have a decent move in either direction ...