CAT Puts

Monday December 29th The DJIA dropped on the opening. Not a massive drop, just like 250 points. So I am looking at Pfizer again, this time to the upside. It's only down $.07. The option volume is healthy which is a moderately good thing. If the markets rebound upwards then these options will be super sensitive to a rebound. Buying one week until expiring Call options on a Monday morning is not usually a smart thing to do. By waiting until the afternoon hopefully morning jitters will be behind us. Now this, a look at it's five day chart. Charts are important. Now a 2:05 p.m. update. First it's current one day chart and another market update. Options on stocks in this price range do not kick as much as stocks in the $100.00 price range. Stocks like Netflix are more exciting to play but cost ten times more per contract to buy. Pfizer can jump $.50 in one day and that's what we are hoping for. Netflix can jump $5.00 in one day. The markets are still struggling. Now this...

First the one day chart. The markets on the day are down. Now it's Puts at 2:25 p.m. Now it's closing price. Now Tuesday morning. In some ways we are wasting our time watching what seems to sideways motion. Is this what successful option trading is all about? It's not like watching Tesla or Caterpillar coming out with earning reports, or watching Boeing jump up in price over the last few weeks. There really isn't any reason to be in this position, other than the indexes are down for the second day in a row. With the clock ticking away at you is this a good time to be risking your capital? Not really. It is a struggle. Now let's look at Walmart at the end of the day on Tuesday. The stock went down in value on the day as did the Puts. Yes the time value is going down which is partially to blame and the indexes also had a drop. These are quiet markets during this holiday period with fewer news report expected to be coming out. Let's see what happens. Low pr...

Ask Ai what a "straddle" is. Here is an example of how one could possibly work. I picked a stock which appears to be going sideways but could have a breakout upwards or downwards. Why think about doing a "stradle" when a stock is going sideways? Well it is sometimes a period of time when the premiums on options, both Calls and Puts settle down with less of a premium for a bias in either direction. Look at these Call and Put options on Walmart. So the question now is how can owing both the Calls and the Puts at the same time on the same stock and with the same striking price make you money? Doesn't that seem kind of odd? The answer is in one of two ways. 1) The first way is to add these nunbers together. Add 68+5+53=$1.26. This number represents the cost of purchasing the Call option, the cost of the Put option and the price it is already "in-the-money". The stock now is trading at $12.05 so purchasing both a Call and Put would pay off only under two...