Featured

Step Down Charts And Short Term Options. Nio

Here is a classic "step-down-chart" with one minute of daytime trading life left in them before the markets close at 4:00 p.m.. The stock is Nio. ... This printout of "in-the-money" Call option also shows one minute of trading life in them before the market closes. It's Tuesday and these Calls expire this coming Friday. You are purchasing three days of market trading life. To purchase one thousand shares of this stock would cost you $5,750.00. To purchase options that control the price movement of one thousad shares of this stock for three trading sessions would cost you $370.00. ( Ten contracts at $.37 each). These Calls are also currently $250.00 "in-the-money" which means if the stock totally goes flat for the next three days your options will still have that amount of intrinsic value left in them. Now think about this. Many option accounts in the U.S. enjoy free option trading and there are discount brokers in Canada who can save you money. A fl...
Post a Comment

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.

Comments

Post a Comment

Popular posts from this blog

Waiting For A Drop On The Opening On Bad News - Eli Lilly

Image
Here is the bad news. The company is Eli Lilly. How bad is this news? Well look at it trading in the premarkets. So what do I think? I think the news is a setback of sorts, but not really all that bad. The stock is going to open lower, that's a given. It's like trying to play Boeing after an announcement that an airplane has crashed. So the stock is going to crash and it might have a small rebound and then it's going to slide down some more. A test of sorts will happen sometime in the afternoon. It might stock falling but then where will it go from there? The best case scenario is a recognition that investors got it all wrong and the stock ends up flat on the day. Yet there might be more of a downward dumping of the stock on the close followed by a selloff on tomorrows opening. Should option players be jumping in to play the upside on next week's Calls? That is the question. Here is a look at Boeing on the days after a crash. Day two after the crash was equally as ...
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

News on Polestar , Lucid (Trading After A Reverse Stock Split) Plus Ford News And Vinfast

Image
Look at the one year chart on Polester. Now it's one month chart. What's going on? It's confusing. It was down $.36 cents on the week. If you want you can spend $.20 or $.25 on Puts and hope that the company goes under in the next five or six months. They recently raised more money by releasing more shares so it's running out of options. You can't run at a loss forever and this news will most likely scare off potential new car buyers. This actually is a low number of outstanding Put options. The consensus seems to be that it is not game over yet. Lucid started trading this week on a "one-for-ten" reverse stock split. Here is its one week chart. It was down $1.39 on the week. It's also going to struggle. Both of these stocks have challenges ahead. On a more positive note here is a chart that looks kind of perky. Ford on the week. The stock was down $.03 cents on the week and it was the 3th highest in share volume trading on the NYSE. It appears...
Read more