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A Random Walk In The Park On A Monday Morning. A Caution. Monday Mornings Are Often Not An Option Players Best Friend

Let's start with this. It's now 10:26 a.m. A bet on Caterpillar rebounding by the end of the week. There are no takers. Why have to watch the screen for the next four days in agony waiting for a rebound which if happens is just a "break even trade"? But Wait. I made a mistake. The market is actually now down 668 points. What else can we look at? Interactive Brokers. These kind of stocks always do poorly on days with the threat of margin calls. Yet there is something interesting about the printout I am about to show. It is that these options are "one-month-out" Calls. These longer term options trade differently than short term options. (these options trade in one month intervals). If the stock we are following stops it's freefall the value of the options will nudge up ten, fifteen or twenty percent. A seven dollar option Call might creep back up to $8.00 or $9.00 at which time it could be sold. In contrast with a five day option a slight reversal in ...
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"Puts" on Caterpillar and The Lion Electric Company

I wanted to call this website "CatCalls" but "Go Daddy" wanted a couple of thousand for that name. Instead I went with "CatPuts" for about twenty dollars. My license plate says "Catputs". Why am I now mentioning this? Well I missed the greatest "Caterpillar" sell off in price so far this year that all happened in the last five trading days. I bought into Calls instead at about lunch time last Monday. My logic and timing were off. I went against my principles of not purchasing "Call" options on a Monday mornings. Here is it's one week chart, it's one year chart and the Deere and Company five day chart. "Caterpillar" dropped twenty dollars in one week or 9.5%. Each day it dropped.
I like playing the Calls and Puts on Caterpillar because as I have mentioned before it is not a stock prone to directional moves based on chit chat. So on Monday and Tuesday I scoured the internet with no luck looking for news on what might be the cause of this unsual decline. There was nothing to be found. The IMF estimates that the global economy will expand 5.8% and the U.S. economy by 4.7% in 2021. Many of last weeks short term "Put" options on "Caterpillar" increased in price ten fold. Analyst are now saying to stay away until it finds a base. The stock has had a good run and as it turns out I got burnt trying to play the top of the market. Stuff like this happens. Next, do you know about a stock with the symbol "LEV"? It's "The Lion Electric Company" which is Quebec based company. They build electric vehicles yet their business model is flawed for the reasons outlined before. Yet traders are buying Calls on it most likely because of it's recent dip.
Orders on the books for over 1,000 vehicles while deliveries of 24 vehicles in the first quarter of 2021 and 2 in the first quarter of 2020. What's going to drive the stocks price back up when their production numbers are so poor. Nothing. 24 or 48 or 96 vehicles is not enough to turn a profit. It's that simple. Now also in the works is the construction of a $185 million dollar electric battery plant next to the Montreal-Marabel International Airport. How are they going to pay for it? Government support? On the surface it seems like they have too much on their plate. Why not just focus more on getting trucks out their door? Incorporated in 2008. That said, it's difficult not to be impressed with how they have gotten this far. The bottom line is that investor's can't wait forever to see profits start to role in.

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