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Caterpillar Puts On A Friday Morning

I am getting some flack from people saying I should have called this site CatCalls and not CatPuts. Oh well, I saved money by going with name Catputs. Now this. Caterpillar closed at $647.18 on Thursday and jumped to $655.54 at 9:47 a.m. on Friday morning. Then it dropped to 641.44, the low of the day at 10:43 a.m. which was 56 minutes later. That's a massive price swing. Looking for price swings on one day options are not normal trades to be thinking about. I get that Look at how this one series of Puts reacted. Option trader as I have often mentioned are afraid to play options on Caterpillar as it defies logic and continues to go up in price. It has an earnings report coming out at 8:30 a.m. on Thursday January 29th. Try and listen to their conference call. Profits may not be as rich as some people are expecting. Input costs have risen. Now let's look at the 650.00 Puts to see how they traded on the day. So few traders attempt to trade in them. Look at the super low open i...
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Yes Boeing's Earnings Report Was Good and The Stock Jumped Up. With Caterpillar Earnings Report Coming Out on Monday Morning Will It Do The Same?

Let's begin with a five day chart on Boeing which includes todays action showing how the stock reacted to the the release of it's fourth quarter profit report. Note that the stock dropped on the day prior to this release of this of this news.

So today's (January 31ST) ten dollar and sixty cent jump in the stock's price was justified because their earnings were up. To profit on this new release meant you had to get into Call options on the day before this earnings report came out. Are you able to see the element of fear or panic that drove the stock down $5.00 on that day? That was the time to be buying in. But wait. We can't always say that a five dollar a share drop in a stock's price on the day prior to it's earning's report release is going to happen. Yet this time it did. So option players this time were handed a gift if they were bullish on the stock. The short term "near-to-the-money" and in-the-money" Call options doubled in a day on the release of this good news. Now Caterpillar has it's fourth quarter earning's report coming out February 5th before the opening bell. That day is a Monday. Will Caterpillar's stock drop tomorrow on Friday which is the trading day before their earning report comes out? Here is how it traded today, a Thursday.
It's now Friday at the close. No it didn't drop. Look at how Caterpillar jumped upwards again as did it's Call options. This once again is the trading day before it's earnings report comes out on Monday morning.
The stock, once again went crazy up. Remember Boeing dropped five dollars on the day prior to it's earning report. Not Caterpillar. Good news is expected. Where you one of the lucky ones who got in yesterday (Thursday) and bought the Caterpillar Calls which expired today? They more than doubled in one day. So now what? Now we have climbed a wall of euphoria. Let's now stop for a second and ask the question of why would one want to take a gamble on Caterpillar's earning being good. Often times it crashes on good earning reports because the analyst expected more. Let me show you how some of the option pros are playing this. What we are looking at now is a series of Call option a few weeks out (Feb. 26th).
What do you notice? This was Friday's action with the earning release coming out Monday morning. An open interest of only 138 contracts and a daily volume of 1,566 contracts traded. Stop and let that sink in! The pros got in Friday morning and glued themselves to their screens and watched the upward momentum unfold.They mostly all jumped out before the end of the day. Why? The risk of being part of Monday mornings trading action was to rich for their blood. Us, little fish should learn to play the same way.

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