Slice and Dice Caterpillar and Tesla Options On A Friday Morning at 11:59 A.M. , During A Downward Moving Week.

This blog is about short term option trading on options which expire in less than one day. A proposterous proposition one might say. I agree, however if you are serious about learning how option trading works the following scenarios of what I am about present are all quite revlevant. Let me begin with the observation that there is next to no trading in Caterpillar Puts or Calls of these two series of slightly "in-the-money" or near to being "in-the-money" options as illustrated below. One of the things that this tells us is that there is no inside news of anything "in-the-pipelines" which might cause this stock to move up or down during the remainder of the afternoon trading session. Caterpillar as often mentioned before in previous postings is not big on making news releases. In contrast, Boeing activities seems to create some sort of news or a reaction almost every other day. Here is what the markets are doing as of 11:36 a.m. which is Friday April 12th.

Shown above is the 11:59 a.m.chart on Caterpillar. What's going to happen in the next four hours of trading? Look at how these Calls and Puts are positioned.

For interest only compare this activity to what is happening with these two series of Telsa one day left to go options just a few minutes earlier. Look at the staggering number of Call and Put options traded.

To be fair, nobody in their right minds would be trying to play any of this action. Or would they? What's going to make the indexes start to turn around? Overall it was a down week with inflationary fears in the air. Now let's look at the five day charts on both of these stocks. Both charts are ugly.

Now the end of day readings. The D.J.I. index keep falling.

In both cases the Puts went up in value and could have being profitable trades. Looking for end of the week rebound in a downward moving market is generally not a good idea. Jumping into the market at noon on a Friday when the D.J.I. is down 307 points looking for more downside action over the next few hours is something to consider. Looking at the closing charts at the end of the day very much supports those kinds of thinkings.