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Caterpillar Calls. Trying To Make It Simple

So if you like the stock Caterpillar and want to play the upside on it using options you could buy these ones. But why would you? They are up 46% on the day so the real money was made in buying them yesterday and selling them today. The stock would now have to go up about $25.00 in one month just to break even and everything above that price would be profits. If you now look at a thirty day chart you will see that's what it did last month. These are "one month-out" options which are ten dollars "in-the-money" and they trade in a different fashion than short term options. Yet that not what I want to talk about. I note that only 13 contracts traded on this series on the day and the open interest in them stands at only 11. What does this tell us? 1) It tells us that professional money managers are totally lacking in their understandings of the dynamics of option trading. 2) It tells us that retails traders are to some degree misguided by the learning materials ma...
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LiveWire

My last blog was about Harley Davidson and what I didn't bring into the conservation was their spin off business which is building electric motorcycles. To be honest these bikes are not getting rave reviews. Two complaints are their crippling range and the possible issue of them being more dangerous to drive because they are so quiet. There is also competion from abroad. Last quarter they built only 63 of them and that experience is part of the company expecting to incur a loss of over $115 million this year. If you do the math each bike built cost them over $200,00.00. A $115 million dollar loss vs a profit of $1.3 billion for Harley Davidison. That loss makes a small dent in the overall big picture and in the process of getting going they used other people's money. Nursing this project to life from a business point of view has merit. Covid didn't help anything. LiveWire has to go slow until the product itself evolves to a level they feel proud to put their name on. Investors know this companies pedigree. See it's chart and read this.
Now go back to the previous blog on Harley Davidson. Put this puzzle together anyway you want. Forcasting of 750 units on the low end is still a three fold increase in production levels from where they are at now. Could they turn to be profitable in the next 1,000 days? Maybe. Yes there are options on LiveWire. Here are the Oct20th/2024 Calls with a striking price of 7.5 and 10 dollars. That's as far out as you can go and no one is trying to play them. The bids and asks are to far apart.
Keep in mind the company will continue to lose money all year. What a muddle. There are easlier games to play.

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