Featured

Climbing The Wall of Greed.

It's a stupid market with stupid things happening. It's exhausting. Investors have to change out their investment strateties. Caterpillar and Deere had big gains this week and one week Call options on both of them went up in price 400 percent. In recent blogs I have talked about things like coming late to the party and making trades where you would make out like a bandit. Look at this mornings action in "Unusual Machines".I have talked about this stock before. Now this. A look at the Call options on "Unusual Machines" at 9:31 a.m. this morning after the stock jumped $1.57 on the opening. These Call options jumped 300% from their close on the previous day. Also look at the large open interest in these options. These Calls still have one week's life left in them. The question now is who would you be stupid enough to be throwing more money into this? Not me after all this that has happened. Now this. In forty four minutes the Calls that were already up...
Post a Comment

Caterpillar Calls And A Friday Morning Bounce.

The markets were spooked on the opening and here is what Caterpillar did in the first twenty-one minutes of trading.
Now here is how the 260 series of Calls reacted.
Notice there was next to no "open interest" in them going into this mornings opening and very little early market trading. A reading of next to no "open interest" is a rare phenomenon. Also notice how this series of options traded down to $.75 (seventy-five dollars) a contract. Would a look at Caterpillars five day chart give us any indication that the stock could break out of it's downward trend? Yes, it suggests that anything could happen.
Now a lunch hour update. Caterpillar exploded to the upside! A bid of $5.95 and an ask of $6.60.!
Two conclusions. Avoid purchasing Calls on Caterpillar at the close on a Thursday (Calls that is that expire the next day). If you like the upside wait and hope for Friday morning early dip. Here we have a prime example of how Caterpillar can bounce. Also, don't let a low "open indicator" number bother you. It amazes me that so few traders recognize the opportunities found with trading "last day" options on Caterpillar. Now a final look at how Caterpillar and the 260 Calls ended up closing the day.
Ninety-three contracts traded on this option series on the day and most of that action happened in the first twenty minutes of trading. Instititions and brokerage houses missed the boat on this opportunity! Wall Street is dumb sometimes. * 3th quarter earnings are due out Oct. 26th. Floods, fires and wars. The world is changing. More Caterpillar products are needed to deal with the effects of global warming. Here are past earning numbers.
But wait. The game of betting on earning reports to be higher than what analyst predict is not one most people want to play. That plus recession worries overshadow the markets. Deere and other companies have had strong past quarters only to witness stock price declines. These are tough times to be in the market when money in the bank can earn 5%. Caterpillar Calls are not on the minds of very many investors.

Comments

Post a Comment

Popular posts from this blog

Living on Kraft Dinner?

Image
What does the word disconnect mean? As a verb it means "to sever or interrupt the connection of or between; detach". Option trading - one day options - is a disconnect from the world. What happens to slightly "out-of-the-money" Call options on Costco when the stock shoot up thirty dollars on the day? I will show you what happened on Friday to Costco Calls and the options on a few other stocks I frequently watch. What a disconnect from the real world. But before that a look at how the indexes traded. 1) Costco. It's five day chart and a look at how three of it's option series moved upwards in one day. You may not know how to read these printouts but try to read the highs and lows on these option pricings. One printout shows an "at-the-money" option which means you are buying a contract on the stock, good for one day only at a locked in price equal to (or very close to) what the stock is currently trading at. The other two contracts shown are ...
Read more

A Fireside Chat - One Year Options and Thirty Day Options. Which is Better?

Image
Some say to think small, not big. Trying to play Disney options is thinking big. It is a stock slightly out of favor. If we start with it's a three year chart, we will see it is down by about 50% over that period of time. Now it's one year chart. If the stock can break 110 in early 2024 the sky is the limit. It does have a lot of moving parts so anything could happen. Look at these Calls options one year out. One year in options buys a lot of time.They look reasonable. If the stock ever inched up to the $105.00 price level in the three or four months these options would jump up in price by about 50%. Even more if they had really good news. Yet it's the "what-if" aspect of the equation that castes such a trade in doubt. "What if" stories just don't cut it. There are to many variables in play. Then again, why are we even thinking of long-term Call options after a December's rally? Let's switch gears. If consumers are out spending for X-ma...
Read more

The Little Engine That Could

Image
Walmart again. It's all I seem to blog about. Here is it's five day chart. The stock keeps going up and the option series are set up in one dollar spreads. Even a fifty cent move on the stock moves the needle on these Calls. Look at how this series of Calls was trading yesterday at 3:00 p.m.. Now here is this same series of Calls just before noon today. Thirty days of upward action like this punctuated by the off day of decline. Now notice the higher volume of trading in the series of Calls with the higher striking price. These are the ones's with more leverage. At the same time look at the five day chart on Costco. The two stocks sometimes trade in tandem. Humpty dumpty sat on a wall .... a had a great fall. Someday soon a fall might happen but what a great ride it has been.
Read more