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Caterpillar - Catching A Reversal On A Monday

Mondays are not the best of days to look for reversals however Caterpillar jumped upwards a modest amount which impacted the value of this series of Puts. The Puts are off about 50% on the day at this point in time. This is a 1:36 p.m.readout. Here is it's five day chart. Now its one day chart. It's Puts. Why consider them? It would seem like kind of a random thing to do. Why fight a strong stock? One reason is that the markets are only mildly up and could give back some of it's gains before the end of the day. Caterpillar could be gaining strenght based on all of last weeks business articles talking about how Caterpillar could potentially benefit from all this new AI movement. Caterpillar afterall builds heavy equipment which can be used in the construction of nuclear reactors. Notice that the five day chart is in an uptrend and notice the small open interest numbers in the Puts. That's understandable. No one wants to hold Puts on Caterpillar when it is in this...
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Tuesday and Wednesdays Looking For Reversals - That's What Some Option Traders Do

What if? But who has money to throw around like water? What if the markets decided to cool it? Wednesdays are usually better days for market reversals than Tuesdays. Caterpillar and Deere both had crazy high gains over the last five trading days. Deere is up after exposing the details of declining sales. Exposing is a strange word to use but it better helps to explain the pain it is now facing. It is so confusing as to why it is up so much. Read my November 22nd, 2023 blog when Deere was pretty much in the same situation. So much forward looking thinking is baked into the the current prices of these two stocks. The question now is could the markets turn on a dime? Look at the Put prices on short term "out-of-the-money" on Caterpillar and Deere positions. The Caterpillar Puts I will first show are like ten dollars "out-of-the money" and the Deere Puts five dollars "out-of-the-money".That's a bit to far out.
Now Deere.
Both charts show a similiar trading pattern and both stocks have next to no outstanding open interest Put positions. Fighting strong charts can be the kiss of death. Yet what happens if a mild selloff hits the markets in the next few days. Are these two stocks sitting ducks? Do you have any crazy money to play with? If you own Deere or Caterpillar stock would now be a good time to cash out and take a touch of your profits and consider Puts options? Admittedly this Friday's Puts are an extreme gamble. Going forward into December traders might be thinking of lightening up on positions with the transfer of leadership coming up after Christmas. Maybe. It's only a thought. The markets will be closed Thursday Nov 28th for Thanksgiving. Trading volumes will be light on Friday. This factor might negate making a trade in "this weeks" Puts with one day of trading to go. Perhaps next weeks Puts might be the ones to be looking at. Now this. Wednesday morning. Caterpillar and Deere continue to climb. Here are the Caterpillar Puts.
Now the Deere 455 Puts.
Both got beat up because they were to far "out-of-the-money" and time is working against us.Sometimes reverals come into the market on Wednesday around noon. If we are still thinking about short term Puts on Caterpillar and Deere here are two now current readouts on the same two stocks but this time with adjusted striking prices. Both are "out-of-the-money" Puts option positions however this time not so crazily "out-of-the-money".
Let's see what happens next. Now this, Wednesday's end of day readings.
Caterpillar Puts had a nice move and Deere continues to go up. Now both their five day charts. What do you think is going to happen?
As mentioned, with a holiday on Thursday friday's action will be somewhat mutted. Both stocks ended up trading slightly up. So looking at Caterpillar only worked on Wednesday and Deere retained most of it's strenght all week. Here are their five day charts. First Caterpillar.
Now Deere.
Stay away from option positions that expire at the end of the week if Thursdays are holidays.

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