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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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Another Earnings Report - "Roku" - Thursdays and Friday Trading.

Please read this Roku "earnings report" blog. Roku was down fifteen dollars in the first hour of trading today after the release of it's third quarter earnings report. Here is a 10:52 a.m. look at one series of Puts that doubled in price on the opening as a result of this sell off.
In my last blog on Caterpillar I talked about points of inflection where stocks rebound after bad news. This time an inflection point may not be in the cards. Caterpillars earning were just shy of expections but nothing had really changed. The world still needs their products and they are still a dominant player in their industry. Roku is a different animal. Their subscribers are a fickle bunch. Companies like Roku and Netflix go up and down all the time. Roku now is just back to a level at which it was trading at earlier this year. I don't know how to interpret their financial statements. Things still look pretty good for them to me.
Once again here is a look at the increase in the value of the Puts today on the opening. It's the same printout again.
Can you see how the Puts jumped on the opening? My point is that getting out near the top is never an exacting science. In the bigger picture, here is a look at it's three month chart and five day chart. The five day chart is the most pertinent one at this point in time. It's rounded cup formation is one of the most difficult charts to read. One thing for sure is that the company is not be prone to putting out any new news releases at this point in time. There is enough things happening without having stir the pot.
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Now look at the above chart and then check out below to look at the Roku options that expire tomorrow. Here are the 64 series Call options and the 64 series of Puts options "end-of-day" readings going into a Friday. Do you think the the Puts might win on the opening only then to watch the stock creep back up higher during the rest of the day? That's my prediction. Keep the stock flat to down on the opening to force the existing option holders to think about bailing out at a loss.
Look now at an open interest number in the Calls of only 22 contracts after 1,447 contracts traded on the day. That's a testament to how fine-tuned one day option traders as a collective group have become. It's almost comical to say that "one-day-to-expiring" option traders are a cautious group. It appears that no one wants to speculate on the possibilities of an opening bell Roku uptick. Why could that be? Are other optionable stocks appearing to trade in the same fashion? Why isn't the right side of a cup formation in a stock chart the right place to be? Why also hasn't the passage of an hour or so of trading time given more analyst the time to rething their bearish sentiment? Now let's take a look at how the Puts are trading. Notice the higher open interest numbers. There is a fear the stock might drop a dollar or two on the opening.
It's now Friday morning and the markets are up strongly.
Here is how the options on Roku are doing. The Calls have lost half of their value and the Puts about a third. That's what the option makers know how to make happen.
Now a look at the markets and the stock at 11:11 a.m. The markets are charging upwards and the Calls now are roughly the same as what they closed at on the previous day. .
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The stock seems to stuck in the mud. Now lets jump ahead to the closing action.
The stock crept up all day and the 64 series of Calls closed at 4.00 p.m. with a bid of $1.59 and an ask of $1.98. * The posted closing price of $.89 is a mistake. It might correct itself going forward. Here now is the five day chart.
Earning report plays are what so many option players enjoy the most.

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