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Trying to Outguess The Markets

A few years back the markets crashed when Russia invaded Ukraine. The front pages of newspapers around the world at that time showed people trying to escape cities which were heavily shelled. Our heart's sank. How could such atrocities be happening? Why were schools and hospitals targeted? War is evil. Guess what? With Trump acting as a new dictator the world once again has gone awry. It's scary that one old man with so much power can abuse the system. What does all of this mean for option traders? It means time to sit on the sidelines. Yes you can jump in playing rebounds and catch some nice short term directional moves. You are basically trading against computers. Why not just sit it out and chill? Everything is amuck. Why be trying to make hero trades? Ironically enough some traders are being drawn into this action. Look at this chart. While its difficult to see because of a "pop-up" on the screen "Netflix rebounded over ten dollars a share after reboundin...
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Caterpillar - It's First Quarter Earnings Report

Boeing rallied yesterday on the release of it's earnings report only then to tank. Caterpillar is tanking this morning in the premarkets. Let's begin with it's 5 day and 30 day chart.
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The world needs to be rebuilt and Caterpillar is there to help. It's growing, it's got a good reputation, it's not laying off employees and it's doing just fine. If it misses a beat on it's earnings report so what? Life goes on. Then there are those pesky analyst who are known to offer a convoluted spin on things. If you like Caterpillar just buy it on the dips and put it away. So the markets will be opening on the commentary by the companies C.E.O of "sales about flat". Phrasing it that way is a recipe for short term disaster.
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The two printouts above show some of the early morning action in one Put series and in One Call series. What happened the next day? A slight rebound with next to no traders trying to capitalize on a rebound. What does this tell us? It tells us option traders in general stay away from trading the "release of earning reports" on Caterpillar.
Now the one week out Call options.
Low open interest, a low volume of trading and relatively big pricings considering the these are only slightly "in-the-money" Calls which might take a few seeks to gain value. The bottom line is that this stock really got beat up and going forward it's going to be again upward journey. It helps that they are buying back their own shares. ** Now a look at how Caterpillar traded at the close on Monday April 29th.
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The volume of Calls traded is very light. That's suprising.

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