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"Tony The Tiger" - A Food Stock

The mood of Wall Street is now changing as the reality of tariffs is starting to kick in. Two weeks ago not so much so. Kelloggs had "so-so" earnings come out a few weeks ago and the stock exploded upwards. Note the very last line above mentions the effects of tariffs are not taken into consideration. So many stocks with "so-so" earning reports have jumped in price based on the "lets make America great again" slogan. Deere stock is shooting to the moon as I keep writing about in spite of declining sales in the last quarter. The sentiment seems to be that they are immune to tariffs. On paper they might be. Read this. Americans are struggling to buy gas, eggs and insurance. Total housing starts in the U.S.in 2024 were down 3.9%. Walmart, the recent darling stock in the last four weeks for Call option players woke up this morning with an earnings report which was healthy but with came with some caveats. Here is what happened. Perhaps the U.S. is starting ...
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Cat Puts on Earning Reports

Third quarter profits were released
....................
Now a look at a statement made after the release of their second quarter earning report three months ago.
So if you were anticipating a price swing on the release of their earning's report could this be a profitable adventure? Suprisingly, yes and no. It depends on how you reacts to the stocks quick and precipitous decline. It also takes a bit of luck. Look at how the "near-to-the-money" Call options and Put options traded just after the release of this news. First the Calls. They lost 82% of the value at this particular time. The open interest number is just over 800 which is actually a small number when you consider Tesla options often trade 100,000 option contracts in multiple series everyday.
Notice how these Calls, the 390 series actually traded down to $.14 or only fourteen dollars a contract before rebounding back up again to $1.42 in a short period of time. That was a nice rebound. Yet then again who would have the confidence in something this far "out-of-the money rebound to where it started at on the opening. If a rebound didn't happen this particular series of Calls would surely end up worthless. Now look at how the 390 series of Puts traded. These are the ones many traders would be looking at on the day prior to the release of this earnings report. That shows you how few traders understand how options on stocks in the $300.00 and $400.00 dollar range work on the release of quarterly earning reports.Notice the open number of only 178 contracts and the volume of trading of only 36 contracts in this series.That's nuts.
At some point in time in the first 36 minutes of trading they dropped down in price to just over $22.00 and the stock quickly snapped back up in price. It took that long for the markets to adapt to the downside and then come to the realization that things were not really not all that bad. No talk about the company losing money, no talk about layoffs. So anyone holding Puts going into the opening markets this morning would of had a chance to more than double their money. Yet your timing would have to be near perfect. That's the hard part of doing this. You have to wonder why so few traders were willing to take these kinds of risk. Now look at this chart.
Look at the almost twenty dollar rebound.
A rebound of $1.34 to $9.65. Look at how few contracts traded. It baffles me that more option traders are not glued to this kind of action. Check back in on Caterpillars next quarterly profit report. ** The magnitude of today's rebound within a matter of an hour rarely happens. The apex point of when the market switches from going down to up is never an exact science to pinpoint. Trader's close to trying to nail it should have confidence in the fills they will get from market orders. With swings of this magnitude if you catch the right direction you will be amply rewarded.

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