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Caterpillar - Catching A Reversal On A Monday

Mondays are not the best of days to look for reversals however Caterpillar jumped upwards a modest amount which impacted the value of this series of Puts. The Puts are off about 50% on the day at this point in time. This is a 1:36 p.m.readout. Here is it's five day chart. Now its one day chart. It's Puts. Why consider them? It would seem like kind of a random thing to do. Why fight a strong stock? One reason is that the markets are only mildly up and could give back some of it's gains before the end of the day. Caterpillar could be gaining strenght based on all of last weeks business articles talking about how Caterpillar could potentially benefit from all this new AI movement. Caterpillar afterall builds heavy equipment which can be used in the construction of nuclear reactors. Notice that the five day chart is in an uptrend and notice the small open interest numbers in the Puts. That's understandable. No one wants to hold Puts on Caterpillar when it is in this...
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Watch Boeing Jump On News

First some news as the markets opened. Horwmet Aerospace offered this sobering news.
Then good old Joe made this statement.
Now the opening chart.
When I see opening charts like this I always want to play it in the opposite direction. What was my take on all of this news. New contracts are great, people are flying again and ticket prices are up. It's all good but Boeing doesn't really need more deals and orders. They are still trying to get back on track. Would this morning bounce go away? I thought so, I jumped in on Puts.
In at 9:45 a.m., 9:48 a.m. and 9:50 a.m. . I was confident in what I was doing but the stock seemed to stay persistently high.
Then I got frustrated with how it was trading and bailed out.
I sold all four contracts at 10:42 a.m. at $2.61 per contract so I only made a touch. I was in this position for just under an hour and was starting to worry about a second wave of buying coming into this position.
This chart above illustrates how they jumped higher in price after I got out and the chart below shows how Boeing traded on the day.
In hindsight these Puts reached a high of $3.70 at 11:50 a.m. I also did a short chase of Boeing as it rebounded but once again didn't have the patience to stay with it. Here is what I did.
In at 11:51 a.m at $375.00 and out at 12:29 at $430.00. a period of time of 38 minutes. I left good money on the table. I went on to successfully trade Visa on the downside and got out of that position 3:59:21 p.m. The DJIA closed down 156 points on the day. Visa released this news after the markets opened this morning. It sounds ambitious but seems a touch risky.
* see my most recent blogs about playing Visa.

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