CAT Puts

Here is it's five day chart. Now here are it's "near-to-the-money" Puts and Calls going into the Friday morning opening bell. First the Puts and then the Calls. So, the open interest is three Puts and nine Calls. If you think about it thats absolutely insane. There is no evidence that existing shareholders are engaging themselves in covered Call writing strategies. There are afterall 730,031,742 shares outstanding. With that number of outstanding shares why aren't there at least 100,000 shareholders using that type of strategy? At the same time the stock is up 6 dollars in 4 trading sessions. Why only nine Calls outstanding going into today, June 30th when the stock in on such a terror to the upside? Here now is the chart at 9:36 a.m., six minutes after the opening bell. Here are the Calls and Puts at 9:37 a.m.on Friday morning. First the Puts. And now the Calls. Now here is where it gets tricky/nasty. The stock is up $1.36 cents and the Call option holders w...

1) Boeing. Full speed ahead. No recent disasters. Backorders. It's not a darling of Wall Street given it has so many moving parts. 2) Telsa. This stock can go hot and cold. Option players love this stock. Five and ten dollar price swings can sometimes happen on a daily basis. Its about time for someone to come out with a new book on this one. 3) Caterpillar. The world needs their equipment and each new piece of equipment they build costs slightly more than last's years model. Wars are good for business. 4) Ford. Over the years it's stock has disappointed. They do however have enough cash to always be in the game. Poor leadership. It has short term options that expire in two or three days that cost like ten and fifteen dollars a contract. They often double or crash in price in a matter of hours. 5) Nio. It's off 75% in the last few years. It has roller coaster options. 6) Rivian. Too big to fail. Not big enough to make serious money. 7) Nexflix. Barrons rece...

What does it mean when someone dumps 875,000 shares of Rivian at 3:59:59 p.m. at $13:45? That's a twelve million dollar ticket.That happened yesterday after the stock sputtered around all day on low volumes of trading. (It usually trades about 26 million shares a day so the 875,000 share ticket may not be all that unusual). That was calculated timing, perhaps computer programmed selling. Would that send off shock waves on it's following mornings trading. Not really. Look at what happened in the first minute of the opening trading the next day. A block of 275,017 shares traded at 9:30:59 a.m. at $13:71. What does this point out? First, it might point out how computerized trading triggers trades to happen in the last second of the first minute of trading in any new session. How you can profit from that observation is something you will have to figure out on your own. It also points out how infinitesimally inconsequential all of the retail option trading is. Your purchase of fi...

Look at the opening on Ford. What a stock to be focusing on over the last week. Call optons that consistently double in price in a matter of one or two days of trading. The party will not go on forever but what a ride. This mornings upward move. If you were trading Boeing or Caterpillar options you would be looking for two or three dollar swings. With stocks like Ford and Nio these recent swings are huge on a precentage basis. That is the power of playing options on stocks in this price range. In yesterdays blog I mentioned Nio. It had news. Look at how the stock jumped again on the opening. That is two days in a row. Is this not intended to be a blog about learning to trade like a pro. There is a high risk involved in trying so guess daily price swings on low priced stocks like this. In some ways what we are talking about is mispricings in the market. Barons is constantly talking about how Ford may be underpriced given this shift to going electric. This will be a multi year sto...

Perhaps the best week of the year for Call option players with a short term perspective. Tesla for example up like thirty dollars on the week. There were short term options on it that increased ten fold. The little exercise I wrote last week about buying Ford Calls at six cents each that ended up on the week selling for over one dollar each a contract actually happened. Is there a need to teach people how to play options? Yes and no. There is an expression 'knowledge is power'. There is the expression 'the rich get richer'. There is a proverb that says 'you can lead a horse to water but you can't make him drink'. But then again people have mortgages and bills to pay and money to play option with doesn't grow on trees. Who am I to tell people what to do? Spreads and straddles and doing iron condors. Sophisticated option traders describe the experience of playing options to being like driving an airplane and pulling levers at the appropriate times to he...

First the year to date chart followed by it's one week chart. It's Friday morning in the premarkets and which way are the 13.50 series of Calls going to trade on the day? Let's look at how the option traders have set themselves up going into the opening markets. First, let's look at the price on yesterdays closing of the 13.5 Puts and the number of open contracts. There are 32,193 13.50 Puts outstanding and they cost seven dollars a contract. Ford closed Friday at 13.58 which is eight cents higher that the 13.5 striking price. To break even on these Puts the stock has to close at 13.43. If it closes lower than that your profits start to kick in. The stock is up one dollar in the last few days and it sputtered around yesterday and didn't do anything so it is conceivable it might give up some of it's recent gain. But wait. Imagine the stock opening ten cents lower, let's say it opens at 13.48 on a nervous opening. If that were to happen the Puts would open ...

What a stupid thing to be blogging about however sometimes you have to write about simple things to make a point. Option trading does not require a huge amount of money. $60.00 will do. It let's you purchase a couple of soon to be expiring out-of-the-money Calls or Puts on stocks under lets say fifteen dollars. Options on more expensive stocks will cost more. Now look at the Ford chart for the last five days. Ford is on fire. So if someone threw $60.00 into Call options two days ago.... well look at what happened. Two days ago at 10:13 a.m. I bought six slightly out-of-money Calls on Ford at six dollars per contract (U.S. dollars) plus commissions. That cost be just over $60.00 Canadian.You could be trading like this also however the trick is in knowing which battles to play. As Canadians we get ripped off on commisions on low cost options like this with a one dollar per contract surcharge. I have talked about this issue before and I do not want to go there now. Today I sold them ...

In a past blog Caterpillar averted a strike and it was noted that the stock jumped to the moon on that news. Caterpillar has a large following and likes good news-made in America stories. Biden avoided his government running out of money late Thursday and on Friday the stock Caterpillar jumped to the moon. It opened higher and kept going up.There is no looking back now at what happened. My May 29th blog talked about how Caterpillar had slight bounce last Friday morning and the light volume of option trading on it. With the stock going sideways to down all that week playing Call options on it was out of fashion. Things changed on Friday June 2nd. Caterpillar bounced. So here now is a look at how two "out-of-the-money" series of Call options traded on it on Friday. Look at the open interest numbers going into Friday. Two hundred and ninety one contracts. Nobody saw this jump coming which is so strange. Once again they were very light. Few traders were expecting the news to c...