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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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Caterpillar, John Deere and Boeing. A Shakeout This Week.

Let's start with their one week charts.
A bad week to be playing Call options. Tomorrow Friday is a holiday so this weeks options expired today. Here is how Boeing traded on the day.
A reward for traders who were glued to their screens all week. Look at how at around 1:00 p.m. the 210 Calls and 212.50 "out-of-the-money" Calls popped.
In around 11:30 a.m. at .11 cents and out at 1:30 p.m. at $2.40. The 212.50 Calls were even more extreme. In at 11:30 a.m. for one dollar a contract and out at sixty-five dollars a contract.
Look at the Call volume. If you were glued to watching Boeing at that particular time you could have caught some of this action. In contrast look at this. Look at how the Caterpillar Calls were trading around 2:00 p.m. in the afternoon. Options on the last day of week that are expired have the rule that you must be out at 3:00 p.m. and not 4:00 p.m. Look at this one day chart at that particular time period.
Now look at this.
An open interest of only 37 contracts going into the day when often times that number is like 5,000. Caterpillar got grubbled all week and few traders were willing to play the upside. Here is how these Calls closed out the day and first here is how the D.J.I. closed out the day. Up 2 points.
Here it is. There was a bit of a rally from 2:06 p.m.to 2:30 p.m. and the above Calls would have went up about 75%. Ultimately however they ended up expiring worthless as also shown below.
Boeing was the trade of the day. Boeing has a constant stream on news being pumped out in contrast to Caterpillar and John Deere. It's the best of these three companies to be playing at times like this, hoping for needed good news.

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