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Showing posts from January, 2022

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Towards Understanding Tesla Calls.

First, forget everything you know about Tesla's current state of operational history. Forget their news about their new factory in Germany, their new models and how many kids a fifty four year old fellow named Elon Musk has. Focus on the moment. In this case it's a Thursday afternooon and we are looking at options on Tesla it that expire the very next day. The interesting thing in this situation is that we are catching Tesla trading flat on the day. It has maintained for the last 2.5 hours a slight predisposition to the upside. Now this as we approach 1:00 p.m.. We find a price of $4.70 for the Call option shown above. These Calls are just slightly "in-the-money" and expire the next day. Things could change even before the end of the day. It takes big money to buy in and the risk is high. I get it. The Puts will also cost you chunk of money. It's Tesla and you are trading with some of the ...
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Disappointment on The Opening - Caterpillar Earnings Report

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Caterpillar's earnings report. What I see is 4th quarter sales up 23%. Strong 4th quarter earnings of $3.71 per share.That's a solid number. Just think, the supply chain issue isn't being used as a mistake. Now look at the the opening options market. The stock is down on the news. Management made a few remarks about near term headwinds. They do that sometimes to temper growth expectations. These two quotes are the 205 Call series which expire today. One is at 9:44 a.m. and one is at 10:03 a.m.. They would be very dangerous to consider purchasing since its very unlikely that they could ever shake off this downward spike so early in the morning. So now what? It's at this time in the morning when the decision to reacte to this bad news gets tricky. The stock is down like ten dollars and the DJI is having a good day. There is a strong tempation to jump in on the upside hoping for a quick reversal. That's one of the things that makes option trading so difficult. One...
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