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Will The Markets Top Out?

The Nasdaq Composite index closed up 4.7% on the week. the S&P 500 index, was up 3.6% and the D.J.I.A.was up 3%. Given the elevated volatility levels options have become extremely expensive to buy. Here for example is how Avis Budget traded on Friday. At one point in the day the 300 series of Calls traded as high as $15.43 on the day. The stock never traded much ovee the $302.00 range. What an exorbitant premium forming part of this equation. ........ Now look at the prices on this week's upcoming Calls and Puts. ... What happened to the old days of paying $5.00 or $6.00 for one week out options on stocks in this price range? Look at how Caterpillar jumped on the week on no real news? Up like $83.00 from it's low of the week back on a Monday. Here now is what a one week out just slightly "out-of-the-money" 790 series of Puts is trading at. That's not as bad as the premiums on Avis Budget but look at Caterpillar's thirty day chart. Actually the stoc...
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The Trade Of The Year On Caterpillar Calls. It's No Surprise It Happened On A Friday

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 five contracts. Few traders were expecting the news to come when it did. This blog could now go in many directions. Last week both Caterpillar and Boeing struggled on the week and option trading volumes dried up. My attitude was not to trade, to wait for better days. I should have known better, the system is a little bit corrupt. Insiders could gain the most from a late Thursday release of good news. A one day pop in the next days options. That is what happened. On Friday the D.J.I. was up over 700 points. The one day options on Caterpillar were star performers. It was the "trade-of-the-year" on Caterpillar Calls. It doesn't look like any of the 100,000 or whatever the number of brokers and analysis there are out were clued into this action. So strange. * Also think about this. Caterpillar has something like 109,100 employees. I don't understand why there isn't more traders in on this action.

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