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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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Boeing

In previous blogs I have often mentioned how Boeing can pop after a weekend. It happened again this morning, a Monday morning. I could end the blog here and say that that's all I want to say. This time there was news.
Was there a tip off that this might happen? Here is how it closed stronger at the close on Friday. It's not much of a tip off but something.
Earnings come out in a few days.
Now it's three month chart.
. Which way is it going to trade next? That's not my point. My point is Boeing sometimes pops on Monday mornings. Most usually just take your profits on the opening and get out. Here is a look at how the $152.50 series of Calls which expire at the end of the week traded today, a Monday.
Have you sold here the top on the opening today you would have gained about 50%. The reverse is also true. If there a hint of bad news would would probably cause a loss of the same percent. Most option traders dont't like holding "out-of-the money" Call options (Boeing was up $3.98 last week and the Boeing $152.50 series of Calls we used in this example closed last week at $5.93. This would have being an expensive, high risk and short lasting trade to make. There is more to this story and lets start with this news.
Here is how the markets and these same series of Call options we looked at above traded on Wednesday Oct 23th.
To be continued.

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