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A Random Walk In The Park On A Monday Morning. A Caution. Monday Mornings Are Often Not An Option Players Best Friend

Let's start with this. It's now 10:26 a.m. A bet on Caterpillar rebounding by the end of the week. There are no takers. Why have to watch the screen for the next four days in agony waiting for a rebound which if happens is just a "break even trade"? But Wait. I made a mistake. The market is actually now down 668 points. What else can we look at? Interactive Brokers. These kind of stocks always do poorly on days with the threat of margin calls. Yet there is something interesting about the printout I am about to show. It is that these options are "one-month-out" Calls. These longer term options trade differently than short term options. (these options trade in one month intervals). If the stock we are following stops it's freefall the value of the options will nudge up ten, fifteen or twenty percent. A seven dollar option Call might creep back up to $8.00 or $9.00 at which time it could be sold. In contrast with a five day option a slight reversal in ...
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Deere On Earnings and Boeing

Here is a look at Deere towards the end of the afternoon after a premarket earnings report was released. It got beat up pretty bad. What we are now looking at is a printout of one Deere option series which will be expiring the next day. This snapshot was taken at 3:37 p.m.. Would now be a good time to buy into these 395 Calls and try to play tomorrow's potential upside? The stock is rebounding from a significant dip.
Lets look at how these options traded the next day. Can you see they hit a high of $4.65 sometime during the following day?
I did two very small trades on the Friday morning bounce back. I just wanted to cover my commissions and make a touch. Remember, Deere options are extremely difficult to play and with only hours to go before this series of Call options expire its not bad to take a profit whenever one materializes.
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My times in were 10:14 to 10:31 a.m. and 10:59 to 11.09 a.m. I missed the elusive high of $4.65 which happened after I got out. Part Two. Can you make money looking for bounces? Look a Boeing's five day trading chart last week and look at how it bounced on Thursday.
Guess what I picked up on Wednesday? "Out-of-money" Boeing Calls, 10 of the 190's, they were way "out-of-the money" Calls and 4, 185 Calls. I got lucky and got the bounce I needed on Thursday morning to make out alright. I did, however sell out to quickly - it's always difficult to guess the top, especially when holding "out-of-the-money" soon to expire positions.
Part two. Now let's move forward to looking at holding Boeing over the weekend. It sometimes pops on Monday mornings. I got in on Friday at 3:57 p.m. and out on Monday at 10:15 a.m. Getting out is always the tough part, trying to pick the correct exit point. This time I was off a bit. I got nervous on the fist dip and should have waited longer. In at $1.06 and out at $1.56.
Here is how the stock traded on Monday.
It dropped on a weak opening and then had some strong legs. It lost steam towards the end of the day. To be continued.

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