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McDonalds Again And A Follow Up To Yesterday's Blog..

Some option traders on Friday mornings just want to be in and out in the first hour or so of trading on short term options they feel comfortable trading. In the second half of the day most of the action calms down. Take your winnings and run. McDonalds sold off a little bit yesterday afternoon and firmed up a bit towards the closing. Could this "mostly downtrend" continue? Here is a partial look at the opening bell's action, today a Friday however let us first look at how the stock traded yesterday. Now a look at it's trading pattern at 9:32.22 a.m. Now this, McDonald's jumps up $4.98 and the 317.50 Puts we followed yesterday which are now "out-of-the-money" acted accordingly. During the fist 2.22 minutes of trading they traded down to 34 dollars a contract. Now this. In the first three minutes of trading the stock jumped a bit and started to come off a touch. These Call options where not attacting all that much attention. The bid and ask jumped up ...
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An Example of Call Options on Caterpillar Prior to an Earnings Release

Not all retail option traders are up to the challenge. What am I talking about? Caterpillar Calls just before an earnings release.This is a blogging site about Caterpillar Calls and Caterpillar Puts. The stock could have a huge jump if the earnings beat expectations or investors could be worried a recession looms. Look at both Caterpillars thirty day and five day charts.
Now look at what the 262.50 Calls are priced at which expire at the end of the week (August 4th).
Very few option traders are playing them. Normal in my opinion should be over 1,000 contracts in a series like this trading everyday and a few thousand open interest contracts. With global warming more heavy equipment will always be needed to rebuild our roads and bridges getting washed away by floods. That plus Caterpillar recently come to terms on their contract talks and supply chain issues are getting better. Did you see how Boeing jumped in price on it's earning report a few days back? Caterpillar could jump too. Here is Boeing's chart in reaction to thier earnings report.
These 262.50 Calls cost about $500.00 a contract to purchase which is to rich for many option players to buy into. I get that. I also understand that the stock is already up over $20.00 in the last month so some shareholders may be thinking of selling out on the release of good news. Looking at Boeing once again look at the open interest on it's slightly "out-of-the money" Calls that are to expire in five trading days.That to me is a normal volume of trading.
Why is there so much caution in the air? One reason is that if Caterpillar jumped five dollars on good news that wouldn't move the needle on it's Call options all that much. Maybe a 50 or 60% gain. Built into the options price is five days of time value which makes them somewhat expensive. What do I expect? I expect a gain. **August 1st. Here is their earnings report.
Let's check back in a day or two to see how the needle moved on this stock. It jumped. The 262.50 Calls well up over 400%.
Wow. It was a crazy gain. PART TWO Let's go on a few days to see what is happening.
Now here is how it finished the week.
Timing was everything.

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