Featured

Ford Always Piggybacks G.M.'s Earning Reports

Look out. Option players can get whipsawed. A good earnings report can be a bad earnings report. If you have time read this. Here is how G.M. traded yesterday after the release of their quarterly earnings report. A heathy earnings report and the stock sold off in price. Now these two readouts. With the stock closing at $50.02 cents might it rebound on the morning after? Now look at this. These options in the first hour of trading don't know what they want to do and they still have a few days life left in them. Ford has an earnings report coming out Feb. 5th. The results of G.M. large cash flows might tweak the interest in owing Ford Calls. Folks this is real time action where trading decisions abound. Here is a 10:03 a.m. printout of how G.M. is trading on the day. Talk about action. Looking at the Ford options knowing their earning report is coming out in a few days here is what are happening with their short term end of week options. Here is it's five day chart. It s...
Post a Comment

Caterpillar Approaching An Earnings Release

What a week for Caterpillar.
Now this. A printout showing how one series of Calls, the $390.00 series traded on Tuesday last week. Thursday was January 23th.
It was up over 313% in one day. If you look at the chart you can see how the stock moved up. Now look at how the same series of Calls closed out the week.
Now notice the small volume of trading in this series of Calls and notice the very small outstanding "open interest" numbers. Caterpillar has over 130,000 employees. It boggles my mind that it's Call options don't have more of a following. I have mentioned this before and many of us know one of the the reason why. Caterpillar never has much gossip to talk about, other than the strike it had last year. Contrast this to let's say a stock like Apple. Apple like Caterpillar has an earnings report coming out this week. What might happen to it is widely reported. Wall Street is bracing for a weak iPhone sales number, especially in China, and a guide down for the quarter.(Earnings per share are however expected to be $167, up 9% on sales of $96 billion, up 6%). Now let's look at what happened the last time Caterpillar had a quarterly earning report. It reported to much inventory in farming and in construction products.
"An ongoing destocking process". That can't be good news. Who is paying the inventory on this equipment? I don't think much has changed in Caterpillars world in this last quarter. Farmers may soon experience rising labour costs if migrate workers are expelled and if construction workers are sent home the demand machiinery used to build houses and apartments might slow down. Will the new tariffs hurt it's operations? I don't know. I also don't know the situation with it'smanufacturing facilities in Mexico. Let's look at how Caterpillar traded on the day of the release of it's last earnings report.
Here we are now. Is Caterpillar now trading at an inflated price? Maybe. It's in a honeymoon mode. Look at how it traded on the day it was announced that Trump had won the election.
Look at how one series of Calls back on Nov 6th reacted to that news.
Now to the present tense. Caterpillar has an earnings announcement coming out this Thursday. Here is it's thirty day chart and a look at it's Call and Put options which expire next Friday. That's the day after it's earning report come out. One strategy would be to purchase both a Call and a Put and hope for a massive move in one direction. It's all interesting however there are easlier battles to play.
I will be watching the option open interest numbers on the opening tomorrow to compare them to Friday morning's open interest numbers. Are traders taking positions in hopes of a Monday morning blip? Maybe. I don't like five day away from expiring options because to much time is wasted on waiting for something to happen. I have more luck daytrading Walmart options. To be continued. Monday morning Jan.27th. Caterpillar was in a bit of a freefall in the early trading.
It's interesting that the Put holders who bought in on Friday are not cashing out right now. Here is how Caterpillar closed out the day.
Here now is how the $407.50 Calls and the $407.50 Puts ended out the day.
The Calls lost over 50% and the Puts went up over 100%. It took nerve to be buying Puts on a Friday with the intentions of holding onto them over the weekend. It did however create a 100% return. To be continued. Todays action with the Nasdaq down over 600 points took some steam out of the markets.

Comments

Post a Comment

Popular posts from this blog

Living on Kraft Dinner?

Image
What does the word disconnect mean? As a verb it means "to sever or interrupt the connection of or between; detach". Option trading - one day options - is a disconnect from the world. What happens to slightly "out-of-the-money" Call options on Costco when the stock shoot up thirty dollars on the day? I will show you what happened on Friday to Costco Calls and the options on a few other stocks I frequently watch. What a disconnect from the real world. But before that a look at how the indexes traded. 1) Costco. It's five day chart and a look at how three of it's option series moved upwards in one day. You may not know how to read these printouts but try to read the highs and lows on these option pricings. One printout shows an "at-the-money" option which means you are buying a contract on the stock, good for one day only at a locked in price equal to (or very close to) what the stock is currently trading at. The other two contracts shown are ...
Read more

A Fireside Chat - One Year Options and Thirty Day Options. Which is Better?

Image
Some say to think small, not big. Trying to play Disney options is thinking big. It is a stock slighty out of favor. If we start with it's a three year chart, we will see it is down by about 50% over that period of time. Now it's one year chart. If the stock can break 110 in early 2024 the sky is the limit. It does have a lot of moving parts so anything could happen. Look at these Calls options one year out. One year in options buys a lot of time.They look reasonable. If the stock ever inched up to the $105.00 price level in the three or four months these options would jump up in price by about 50%. Even more if they had really good news. Yet it's the "what-if" aspect of the equation that castes such a trade in doubt. "What if" stories just don't cut it. There are to many variables in play. Then again, why are we even thinking of long-term Call options after a December's rally? Let's switch gears. If consumers are out spending for X-mas...
Read more

Trump Media Technology Options With Three Days To Go.

Image
On Tuesday just after 3:00 p.m the Trump Media Technology Options had stop traded again. What is the next 24 hours going to bring? Who knows. So many option traders follow this stock and most are afraid to buy either Call or Put Options on it because their premiums are so expensive. If Trumph wins the stock should soar and if he loses the stock will tank. The option premiums are priced expensively in both directions. Here now is how both the Calls and Puts traded on the opening today. First the Calls six minutes into the opening. Now the Puts. Now a look at how these options played the day. With a "stop trading" situation the option session ended a little bit early as evidenced in these following readings. Notice also how low the open interest number is in these Puts. Option traders for the most part opted to stay away from this situation. Now this. Trump wins. Here is how the 38 series of Calls traded just after the opening at 10:11 a.m.. The stock is up however the...
Read more