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The DJIA Index Down over 900 Points With An Hour Left In the Trading Session.

If it wss down 600 points at this time in the trading session and not down over 900 points you might expect to see a slight rebound in the final half hour of today's trading. That doesn't seem to be the case. The over 900 point drop in the indexes adds an element of scare. Now Caterpillar which is down over $19.00 on the day. Would this be a good time to catch it for a rebound? Is has being a particularly strong stock as of late. Might it be one of the first stocks to rebound after today's train wreck of a day? Look at the 625 Calls that expire at the end of the week. Only five contracts have traded on the day. Traders are not rushing to buy back into it looking for a strong close. Yet they are more interested in the Call options on it about ten dollars "out-of-the-money". They cost less but will be slightly less sensitive to only a one or two dollar rebound. They need more of a bounce in the stock's price. Here they are. Now here is Caterpillars one day ch...
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A Follow Up To A Recent Blog I Did About Playing Two Week Options

Let's begin by saying I am not a big fan of buying "two-week-out" options. Yes they cost a touch more than "one-week-out" options however that is not the reason why. I like thirty day out options and one year out options and Monday, Wednesday and Friday "one- day-options" better. So what's the matter with "two-week-out" options? Here is my answer. Back on January 6th we looked at the Interactive Brokers Group 180 series of Calls that expire on January 17th. At that time they were trading at $4.90 a contract. Here is a look at that printout I posted.
Now this, a Friday January 10th printout. The DJIA closed down over six hundred points on the day.
So here we are at the end of the week and we have for lack of a better word, wasted four days or almost half the life of these options. But wait. Can you see how they where down 47.66% on the day? That means on the previous closing session they were trading at $6.25 per contract. (It's a brokerage company so it's obvious it's going to drop on a day the market has a big sell off). Now a look at it's five day chart.
Imagine buying Puts on it on the morning rally on Tuesday morning and getting out at a huge profit minutes later at about 10:30 a.m. If you follow the charts wouldn't you recognize that could happen? If you answer yes then why do you need to clutter up your mind with "two-week-out" options. I say this because I feel more secure playing five, three or one day options than I do playing "two-week-out-options". Yet that's only me. ** Yes there was a decent profit to be had on the "two-week-out" options preceding Fridays precipice slide but that's another part on the "two-week-out" option holding syndrome. The urgency to take profits isn't there compared to playing shorter term options. ** How did these 185 Calls end up trading on January 17th?
Bottom line. The options on this stock are more interesting than most.

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